The last two weeks have been given over to overoptimistic outpourings of happiness. Here is the grumpy note I put out on April Fool’s Day as the aforementioned came out skipping into the park, hope reliably triumphing over experience:

Do you feel lucky, punk? Well, do you?

The Constitutional Court ruling against Jacob Zuma yesterday is another significant blow to his credibility and will reflect negatively on the ANC. However he (Zuma) remains in control of his party (even if slightly weakened) and with a significant degree of electoral popularity, especially in rural areas and KwaZulu-Natal. For now I maintain the position that he is most likely not to be recalled before his terms of office ends in 2017 (as ANC President) and 2019 (as country President) – although a recall remains a reasonable possibility. I outline the arguments for and against this view.

Does Jacob Zuma face a recall?

A flurry of speculation about a possible recall of Jacob Zuma has followed the ruling against him and the National Assembly by the Constitutional Court yesterday.

So what?

The Financial Times yesterday pointed out in an article sub-headed “Real and Ibovespa[1] shine as president’s prospects darken” that “Brazil’s left-leaning president, Dilma Rousseff, probably will not miss when she leaves office … the tendency of markets to loudly applaud her every misfortune” – FT online on March 31 2016 at 08h35.

A similar dynamic is emerging around the apparent fortunes of Jacob Zuma – at least since his unexpected and unexplained firing of widely respected Finance Minister Nhlanhla Nene on 09/12/2015.

So will Zuma be recalled before his terms of office expire?

As an ‘uncertain future event’ question, I am obliged not to give a ‘yes or no’ answer – after all, how can I know?

In the normal course of events Jacob Zuma would be replaced at the ANC’s National Conference in 2017 (probably in December of that year), and as country President after national elections in 2019.

However the damaging scandals that are accumulating around him – the Nkandla scandal and now the humiliating ConCourt ruling, his raid on the National Treasury that underlay his firing of Nene, the widespread criticism of his apparently crony relationship with the Gupta family businesses, the serious deterioration of the State Owned Enterprises and other areas of the state, partly as a result of corruption that directly implicates his (Zuma’s) patronage networks – must in turn be damaging his ANC party.

AGAINST RECALL

The ANC’s political history will favour an instinctive taking of a protective stance towards its leader and attempting to present a united external front.

The ANC is facing a major electoral challenge in national municipal elections in (probably) August this year. It would be extremely difficult for the party to deal with the recall of a still popular and powerful (however bizarre that might seem) president and fight an election at the same time.

The ANC was badly damaged and riven after the recall of Thabo Mbeki by the ANC’s National Executive Committee (NEC) in September 2008 and is likely to be cautious about undergoing a similar process against Zuma.

Zuma remains powerful within the ANC, having bound the majority of members of the NEC and many powerful provincial leaders into loyalty networks based primarily on patronage and the threat of the loss thereof. His power is slipping but my guestimate is that support is still comfortably above the 50% mark.

Zuma remains popular in large sections of the electorate, particularly in the majority province of KwaZulu-Natal and in most rural areas. He has lost significant support in urban areas and amongst the emerging black middle-classes, but this ‘loss’ is still a minority of the ANC’s electorate.

The ConCourt ruling essentially affirmed something Zuma’s counsel had already admitted to in the original hearing on Tuesday 9th of February and was surprising primarily for its clarity and depth, its additional criticism of the National Assembly for not holding Zuma to account and its clear list of corrective measures to be taken. This is to say it shouldn’t have come as a surprise to the markets or the public.

If Jacob Zuma loses control of the ANC and of the succession process the chances of him becoming swamped by serious corruption allegations after his term of offices ends increases significantly. His and his cronies’ backs are to the wall and they will fight vigorously – and with proven skill – to prevent a loss of control of the ANC.

FOR RECALL

Jacob Zuma has brought much scandal to the Presidency that we believe has damaged the party’s support – although not yet to a degree that puts the ANC in danger of getting below 50% in a national election. (Again a thumbsuck – Ed.)

The growing scandals have finally led to the emergence of an internal opposition (internal to the ruling ANC) that showed itself with Jacob Zuma being forced into an almost immediate recall of Des van Rooyen as the replacement finance minister after the Nene firing and the appointment of a previous finance minister, Pravin Gordhan. Since then significant cracks have begun appearing in Zuma’s previously impervious hold on the party, particularly around his apparently corrupt relationship with the Gupta family, whereby he may have handed his exclusive obligation to appoint cabinet ministers to the Gupta brothers. Again, these are setbacks, but have not yet left Zuma isolated. (A lot has happened since I wrote that … amazing that it was only 14 days ago).

If the ANC does particularly badly in the coming municipal elections it is likely that pressure for some kind of recall will increase in the party.

As Zuma moves closer to the end of his term – and the end of his ability to dispense patronage – it is likely that more distasteful aspects of his support will begin to dissipate, leaving him more vulnerable to an early recall.

On balance …

I think it is most likely that Jacob Zuma serves out his full term of office in both the ANC and the country. Additionally I think it is most likely that as we move closer to the end of his terms of office he will agree to take a step back and play more of a ceremonial role – probably in exchange for some form of promise of immunity. (We are not confident that such a “promise” has any value, but will examine this in later posts – Ed).

A recall is not impossible – or a resignation due to ill health, for example – but I consider this a lower probability than the alternative. It is important to point out I am not ‘married’ to this view and we will change it if and when circumstances and the facts change.

Lame duck – or at least limping slightly

What is clear, and should be considered good news, is that Zuma and his allies are fully taken up with fighting a defensive action. This significantly will lower their confidence and ability to engage in untoward activity with regard to state expenditure, also in the expenditure of State Owned Enterprises, or in undertaking any major cabinet reshuffles to achieve these ends. This may also apply to the proposed nuclear programme.

For example any form of follow-through on the December 2015 raid on the National Treasury or attempts to undermine Pravin Gordhan in his role as National Treasurer are likely to retreat (or at least be deprioritised) in the agenda of the Zuma clan and its business allies.

Thus the impunity with which Zuma and his allies have acted in ransacking aspects of the state is collapsing through hubris and overreach. His support is, as I have argued previously, brittle: hard, unyielding but likely to shatter when it breaks.

I have been completely taken up with a project (now completed) that argued that the black African middle-class was our single biggest asset and the workings of the interests of that class in the world would save our politics and help our economics. Yaay!

The basic argument looked at the defection suffered by the ANC in the May elections from its most sophisticated constituency and went on to argue that things were going to turn out rosy in the end. (There are hundreds of tables and graphs and other clever financial market type number crunching that was mostly done by my brilliant colleagues …. but I will only publish a version of that when I have had a chance to chat to them and get their permission).

Not everyone bought our story, but soon you will be able to make up your own mind if our grounds for optimism (that the ANC self-corrects) have an adequate basis.

The ‘black African middle-class saves South Africa’ project (which is what we started calling as a sort of shorthand … the report is LONG so trust me that really is shorthand) has held me back from completing my promised comments about the SACP. The further we went with the ‘middle-class’ project, the more disturbed I have become about the the role the SACP played in engineering the end of Mbeki’s presidency and it’s iron protection of Zuma through the chaos he has brought upon us over the last 4 years.

So as promised I will write that out here and publish it before year end … that’s the SACP story … so 2 promises so far.

Meanwhile here is an extract of my bespoke comments (now too dated to remain bespoke) on the Numsa split (written on the trot) a week ago. My brilliant editor friend in London suggested it be titled:

South African politics: Love’s labours lost

Numsa expulsion … if you love it let it go, if you hate it pray for its demise

The central Executive Committee of Cosatu expelled the largest member of the trade union federation at an extended weekend meeting of the special Central Executive Committee (CEC). Irwin Jim, Numsa general secretary gave a 3 hour long spirited defence of Numsa and attack on those trying expelling the union – but to no avail. It has always been a foregone conclusion, but what Numsa was doing was contesting the terrain, trying to stay as long as possible to take as many members and individual with them. The strategy has probably worked and they have come out, if not smelling of roses, then not badly damaged.

So what?

Numsa’s ideological position reaches back in an unbroken line to a strong and independent left faction (referred to as Workerists) which at the formation of Cosatu in 1985 were still strongly critical of the over-close relationship with the ANC. They believed that the ‘national liberation agenda’ of the ANC would swamp the more limited agenda of the pursuit of workers’ rights – and the more expansive pursuit of socialism – and that therefore the unions need to be wary of this ally and always fight for their independence.

As it turns out Cosatu did pretty well out of its relationship with the ANC – getting much of the labour market structured in their favour – to the point that it has done some real damage to our economy. However, the tension between the ANC and Cosatu has continued to rise. Cosatu didn’t like the National Development Plan (too pro-markets), Cosatu didn’t like e-tolling (who in Gauteng and outside The Treasury does?), Cosatu didn’t like the Treasury setting the limits of public sector wage increases, Cosatu didn’t like the youth wage subsidy, believing it to be the short end of segmentation of the labour market into more and less protected (cheaper and more expensive) workers.

And of late the ANC, at the end of its tether about the losses of revenue from the platinum and Numsa strikes, at the violence that accompanied the platinum strikes, at the damage done our investment image by strikes, at the damage done the limping infrastructure programme plagued by strikes, has finally started talking about amendments to the Labour Relations Act that would make it a lot more difficult for Cosatu to strike (make secret balloting compulsory) and make it difficult for nationally damaging strikes (like Amcu’s strike in the platinum sector) to go on indefinitely (make some form of forced independent mediation obligatory after a certain time of being on strike.)

Numsa, and Irvin Jim – and Cosatu general secretary Zwlinzima Vavi – have gradually come into more and more serious conflict with the ANC and the SACP over these policies – and the relationship has finally broken. It must be said that Vavi and Jim have also been on the side of the angels on a number of different issues as well; Corruption Watch, abuse of ministerial car allowances, various human rights issues, including the Dalai Lama visit, the Right to Know Campaign, the Treatment Action Campaign, the protection of the Public Protector, the getting of Zuma to pay back the money, the Gupta wedding, horror at the proposed done Russian nuclear deal … the list is too long, but, in general (and with one or two notable exceptions), Cosatu under Vavi and Jim have defended the defensible – unlike their erstwhile comrades in the ANC and SACP

The expulsion of Numsa, which might quickly be followed by the exit of its closest allies the South African Commercial Clothing and Allied Workers Union (Saccawu), Communication Workers Union of South Africa (Pawusa), Democratic Nurses Organisation of South Africa (Denosa), and South African Football Players Union (Safpu) will leave Cosatu much weakened and with an over preponderance of public sector unions.

Numsa – the world is its oyster

For Numsa, the world is its oyster. It has announced intention to set up forums of some form of ‘socialist alliance’ – which we must assume will evolve into a political party, perhaps testing the waters of some constituencies in Nelson Mandela Bay and Johannesburg (where it has pre-existing strong union organisation that could easily be redeployed as party structures in the 2016 municipal election.

Numsa can also now freely pursue its strategy for vertical integration into mining, processing, construction, energy, and manufacturing, including light manufacturing and food processing. Numsa sees these whole value chains of particular metals (and possible other minerals) as natural pillars through which they can exert more power over employers and employer organisations. Up until now Cosatu’s slogan of “One Industry, One Union, One Federation” has prevented Numsa realising its full ambitions (although several unions, especially Num have complained for years that Numsa has poached its members.)

Cosatu?

This leaves Cosatu with the heavyweight public sector unions as its dominant component (and, officially, remember it is still bigger, if not more vigorous, than the bits that have been expelled or might leave in sympathy with Numsa). However the public sector unions are about to embark on a do-or-die wage negotiation in the Public Service Co-ordinating Bargaining Council. Keep in mind that Numsa fought to stay in Cosatu primarily because it believed it could pull the heart of the federation with it, that in each of the unions, large and small, there were branches and sections and individuals who supported Numsa and supported Numsa’s decision to not back the ANC in the last election. Including significant parts of the public sector unions.

Strikes are a testing time – in fact, wage negotiation are a testing time – and even more so when you have on the other side of the table representatives of a state, so absolutely constrained by the fiscal ledge to which it is clinging that is unlikely to shift towards your bargaining position. The MTBF issued by Finance Minister Nhlanhla Nene last month was as close as we have come to the austerity of Trevor Manuel’s first few budgets in the mid 90’s. This was the heart of the Cosatu (and South African Communist Party) attack on Mbeki’s government, with ‘the left’ arguing it was a form of Kowtowing to the Washington Consensus. ‘The left’ then and now believe the way to economic growth is by state spending as a stimulus that creates the virtuous circle. Nene’s budget was the heart of the “1996 Class Project” that Zuma and his allies supposedly defeated at Polokwane in December 2007, which takes the decidedly opposite view of growth: that the state needs to make room for investment and that government needs to create an environment maximally attractive to the same. And part of doing that is keeping borrowing and therefore spending strictly within the bounds acceptable to global capital markets.

Cosatu is now dominated by unions that are not involved in the productive economy. It’s basically the South African Democratic Teachers Union (Sadtu) and the National Education, Health and Allied Workers Union (Nehawu) and the burned out cinders of the likes of the National Union of Mineworkers and other bits and pieces. More than anything these unions are dependent on state spending … but from a state that seems to be all out of resources. We do not think that while Sadtu and Nehawu are ostensibly close to the Zuma faction of the ANC that this is going to take any of the sting out of the coming public sector wage round. Which trade union loves the boss enough to tell its members to back off because he is in political trouble? None that we have ever heard of. And anyway these unions all face a myriad splits, including towards Numsa … they have to show their members they can win them a decent deal.

SACP?

The SACP backed, to the hilt, with everything it had, Jacob Zuma’s rise to power at Polokwane. It did so because its main task was to stop Mbeki and the political programme he represented. Mbeki was increasingly basing ANC policy on promoting the rising black middle-classes and he was doing so at the expense of the trade unions and the SACP for whom he seemed to express ever greater public contempt – and in my opinion would eventually have moved out of the ruling alliance … essentially by collapsing it. The is no question in our minds that Mbeki was making sure that both the SACP and Cosatu had less and less power over ANC policy making. Obviously Mbeki overplayed his hand, not believing his enemies would stoop to backing Jacob Zuma for president. Well he certainly called that one wrong and the rest is history.

The SACP still sits as Zuma’s main backer. Cosatu has essentially collapsed under the pressure of trying to keep its unity and back this president at the same time. The ANC Youth League was expelled along with Julius Malema because Zuma became so tarnishing that it was impossible to stand by him … and it now (the ex-ANCYL) exists as a vigorous and challenging opposition party, the EFF.

So the SACP is sitting there in the Kraal with Jacob Zuma, defending him to the hilt on his myriad transgressions, trying to explain to the world how it (the SACP) is the true representative of the working class as the millions follow Numsa out of the alliance – and it is impossible to avoid the fact that Numsa’s most virulent criticisms are for the SACP.

The ANC

The ANC is looking particularly forlorn. They fought this split, understanding that the loss of Numsa would lead to other losses and would make the 2016 municipal election a myriad-sided fight in which the ANC was likely to get a bloody nose. The ANC still has way to fall. It got just over 62% of the vote in the national election in May this year and just under 62% in the municipal election in 2011. The trajectory is downwards (the party does worse in municipal polls) and there is much fear (if you support the ANC) and much anticipation (if you don’t) of catastrophic results for the ANC in 2016.

As it happens part of our ‘upside surprise’ scenario, is one in which the ANC, freed from the constraints of its alliance with organised labour, recognises the errors of its ways, elects a clean, reforming and effective leadership in 2017 (the National Conference), shuffles the current crew off to the safe retirement and comfortably wins the 2019 elections with a decent development plan at the helm. But this precisely requires the ANC getting a serious shock in the 2016 election. It sounds like a fantasy and probably is. But it is unavoidably apparent that the conditions are looking increasingly hostile for the ANC.

It does appear that if the ANC doesn’t do something radical and soon, it could be in serious electoral trouble. Of course it might chase the EFF and Numsa’s socialist policy in the belief that this would win the party votes. We think there are other and better options the ANC is considering but they are not on the table yet and all we can hear is the repeat of “welcome to the second, more radical phase, of the transition” – which doesn’t actually mean anything, but sounds vaguely (distinctly?) threatening to investors.

I will get on to the weighty question of whether Jacob Zuma might retire before his term of office is completed momentarily, but first let me mention that I have been busy with what started as an idle rumination about the South African Communist Party.

But has turned, inevitably perhaps, to “become persistent and recurrent worrying or brooding” (from the third meaning for ‘rumination’ given in the link above.)

I am at a serious disadvantage when assessing the SACP. Unlike many of my readers I was always an admirer of the party – well, certainly in the bad old days of the struggle against apartheid.

Slightly more difficult to explain is that I am still moved by Billy Braggsinging The Red Flag, and the pleasure I once took at the same artist (or perhaps another, even Google can’t nail it for me) singing a song that went something like “Stalin wasn’t stalling, when he told the Beast of Berlin, that we’d never rest contented, till we’d driven him from the land.”

So I am hard wired, deep in my political DNA, to not think ill of the SACP – which is why the party riding Jacob Zuma to power, its dogged defence of the President’s most unsettling activity and much of the threatening sloganeering and bullying that gets published as Red Alerts on Umsebenzi Online have had me at a real analytical loss.

I have provisionally titled the post: “O SACP, SACP! wherefore art thou SACP?” It wanders around a bit, speculating wherefore, actually when you get right down to it, art the SACP? There are various asides of a semi-personal, even light hearted, nature – but the path of my meander has definitely darkened and right now I feel I am, metaphorically speaking, in a gloomy forest and the growing stench suggests there is a poisoned well somewhere up ahead.

So I have decided to take a bit more time and care on that.

Meanwhile here are some of my recent comments (sent to clients on the 3rd of this month) about the increasingly widely discussed matter of the future of Jacob Zuma.

Jacob Zuma – will he stay, will he go and does it matter?

My basic view of the question in the title is:

Jacob Zuma is more likely to retire early that I have considered previously.

There is wide variation in the quality of South African politics, administration and government, with awful, mediocre and excellent aspects. This variation will not be overwhelmed or overdetermined by whether Zuma stays or goes – although it would also be incorrect to suggest it doesn’t make a blind bit of difference.

In general I would assert that Jacob Zuma is as much a symptom of the problems as he is a cause of them – although I would, if someone held a gun to my head, go with 60% symptom, 40% cause (I had it the other way around when I sent this out initially, but that was just my dyslexia playing havoc: Zuma is less the architect of history than history is the architect of Zuma – no Nkandla pun intended).

Additionally, Jacob Zuma’s term of office would end in 2019 anyway and his replacement would be elected ANC President at the 2017 national conference. We are, at most, not much more than a year off knowing (or having a pretty strong idea) who the likely replacement of Jacob Zuma will be even if he (Zuma) serves out his full second term.

However, unexpected transitions can be destabilising, especially if the incumbent has much to lose if he loses (like going to prison, losing some of his and his family’s accumulated assets and having his powerful political network’s continued asset accumulation threatened – just to take a few arbitrary and hypothetical example of why such a persons going might be a messy business).

However, I am of the opinion that the question is worth considering, but we need to get some of our methodology right first:

This is a future event and as such it is uncertain and unpredictable. There is no acceptable methodology (that I understand or can use) that can reliably (academically, empirically, scientifically) give a probability estimate as to the potential outcomes.

It is crucial to avoid the trap of predicting a particular outcome and then assembling the evidence to support it – and, further, attempting to defend the prediction over time as ‘the facts’ move against it.

We need an adequate reason to believe the outcome is important, not important or somewhere in between – or all of these things at once , with this last choice being the one I would probably go for.)

The past (Zuma’s survival against the odds up until now) is not a predictor that he will survive the confluence of events. If that argument held weight, then we should argue that nobody alive today will die because they haven’t died up until now – I attempt to fill-out this assertion under “Jacob Zuma, the survivor” below.

Normative reasoning is acceptable, but we need to be conscious of doing it when we do it. In this case my ‘normative’ assumption is that a successful and calm succession completed before Zuma’s term of office expires in 2019 would be a ‘good thing’, perhaps even a precondition for the reestablishment of political stability and financial market trust in the bona fides of government (and lower risk levels in the geography and assets administered by the South African state). However, as I mentioned previously, I think this is a necessary not sufficient condition for such improvements.

Jacob Zuma, the survivor

It is being argued repeatedly that Zuma is the quintessential survivor, that he has the ANC and its National Executive Committee wrapped up, that he demonstrated this again at Mangaung in December 2012 (see here for a persuasive example). I do not disagree with these assertions. But to accept that argument as complete we must establish that there are no new facts or new elements that might impact upon that assumed outcome.

Much has changed (both in fact and in my interpretation of the facts) over the last 18 months:

The alliance of forces that backed and defended Zuma’s rise to power at Polokwane has disintegrated. Crucially Julius Malema is now heading a hostile opposition party energetically represented in parliament and Cosatu is undergoing an on-going collapse – and it’s biggest union Numsa is in the process of setting up a socialist political movement that has as one of its founding principles that Jacob Zuma is the epitome of the corrupt and disastrous leadership cadre that have hijacked the ANC and the country (this is Numsa’s – and Malema’s/EFF’s – oft expressed view, not mine.) These are the very people and institutions that where the centre of the campaign that brought Zuma to power. (The SACP is pretty much ‘the last man standing’, which is what has led me to look more closely at the whys and wherefores of that phenomenon.)

I am under the impression, but am unable to ‘prove’, that key elements and individuals of Jacob Zuma’s support base in Kwazulu-Natal are starting to hedge their bets and keeping open the possibility of shifting their support to either Zweli Mkhize (ANC national treasurer and previous KZN premier) or Nkosazana Dlamini-Zuma (Current AU chair with too many other credentials in SA politics and government to begin to list). Both these candidates would be acceptable to the powerful (dominant?) KZN ANC. I cannot be certain if this is “true”, but this is my impression.

There are signs (rapid apparent weight loss, increased ‘time off’) and widespread speculation that Jacob Zuma’s health is an issue in play. Again I cannot ‘prove’ this – that would require his confidential medical records, amongst other things – but there are many circumstantial supporting elements that I have discussed several times elsewhere.

The linked controversies around Jacob Zuma, the allegation that he has improperly allowed the Gupta brothers to capture important aspects of the state and government, that he has abused public finances to build his Nkandla home, the various allegations around the Arms Deal scandal, with reference to convicted fraudster Shabir Shaik, (and the attendant ‘spy tapes’ scandal), the infiltration and destruction of the National Prosecuting Authority, the similar damage and modality of damage done the various structures of national intelligence as well as crime intelligence – all apparently in an attempt to protect Zuma from the legal consequences of his actions are starting to cause serious strain for the ANC.

The losses of 11% of voting support in the ANC’s most sophisticated middle class electoral constituency in the economic heartland of Gauteng in May this year and the serious worry by the Gauteng ANC that this damage might deepen in the 2016 local government election. The assumption (that I share) is that at least part of this is because of the myriad scandals surrounding Zuma.

The noisy disruption of Parliament by the EFF in an attempt to get Zuma to account to the public and to Parliament for Nkandla expenditure … and the degree of national embarrassment that surrounds this.

There has been a coup (which has now degenerated into a volatile stalemate) against the Lesotho government which had just issued the Gupta brothers with diplomatic passports. This both exposes the degree to which the Guptas have captured key political institutions in South and southern Africa, but also that that capturing is being exposed and challenged all over the place and the most significant person most publicly connected to the Gupta brothers is Jacob Zuma.

Jacob Zuma has just visited Russia, alone and forlorn, and in a manner and context that appears to me that he is the supplicant – when logic dictates that Putin should have been the supplicant.

The future, scenarios and consequences

Zuma may well survive to see out his term but the facts suggest that the possibility of outcomes different from that are rising, and must be seriously considered.

Zuma’s health could deteriorate and he could be forced out of office (this is a risk with any leader at any time but is raised with regard to Jacob Zuma for the reasons discussed previously)

The ANC, suffering the myriad consequences of Jacob Zuma’s myriad failings, might be finally moved to attempt to move him out. The ruling party could do this by promising him security in Nkandla and immunity from prosecution. It is by no means clear that the ANC could summon the leadership capacity to undertake such a manoeuvre and it is unlikely that the National Executive Committee of the ANC, for now completely beholden to Jacob Zuma for jobs, position and access, would be the instrument that could initiate such a manoeuvre. But just because I can’t come up with a mechanism which might bring about such a change does not mean that that change will not happen (although I do accept that the arguments here would be more interesting if I was able to give a plausible and new mechanism for such a change.)

If there were a sudden ‘run’ on Zuma, if his apparent weakness suddenly became more visible, his supporters would vanish like the morning mist. There is no cadre of leaders and supporters waiting in the wings to set up a version of the Cope political party that Mbeki’s supporters established after Mbeki was fired.

There are a number of potential successors to Jacob Zuma, the prospects of whom I have assessed on a number of different occasions. To the two I have mentioned earlier in this note, add Cyril Ramaphosa, Lindiwe Sisulu, Baleka Mbete – and, as a safe pair of hands, stalwart stand-in Kgalema Motlanthe. Any of these candidates would be acceptable to the electorate, to the ANC and to financial markets, although each group, and probably each individual within each group, might have his or her specific preference.

Power vacuums and unexpected transitions can be destabilising and risky and can be accompanied by wild swings in financial markets. It is important to keep the possibility of this in mind. This is not the same as saying: ‘this is happening’ … or even: ‘this is more likely to happen than not’. It is purely saying this is more likely to happen than I previously thought and it is worth keeping in mind.

A useful critique of thinking around this issue was published by a senior ex-intelligence officer Andre Zaaiman a few days ago. Catch that here … you might be able to see that we spoke about the issue over a cup of coffee before either of us wrote about it.

Listening to the EFF be the rock against which Zuma’s blithe refusal to account finally dashed itself yesterday I felt briefly elated.

Gangsters! Bashi-bazouks! Yes, PAY BACK THE MONEY! PAY BACK THE MONEY! Billions of Blue Blistering Barnacles!

But after a moment’s reflection I pulled myself, by the ear, back into the vehicle.

“You irresponsible old twit!” I said, my mind drifting back to this blog post from August 24 2010:

Waiting for a saviour to rise from these streets*

Just when all hope flees, as the last good politician still within government leaves his/her post to join the feeding frenzy and as the last decent officials trying to do a public service throw up their hands in disgust; and as the striking workers blockade the last functional HIV/AIDS clinic and trash the streets again; and as the broken bits of the Ruling Alliance go for the kill in their eye gouging, groin stamping gutter fight – just as all hope flees, whose silhouette is it that appears, backlit and heroic, flying in low over the horizon?

“Franco”: General Francisco Paulino Hermenegildo Teódulo Franco y Bahamonde Salgado Pardo de Andrade – and yes, he did keep his armies up his sleevies

Is it a plane?

Is it a bird?

No, it’s … hmm, I’m not really sure.

When things are going as badly wrong as they are going for us, the person to look out for is the one who seems to have been sent by history itself as the solution to all of our problems.

I am not suggesting, as my old Granny used to say: don’t worry, cometh the moment, cometh the man or all’s well that ends well. I am suggesting the very opposite.

This is more of a warning to be careful about decisions we make when we are desperate than it is anything else.

Societies, political parties and whole nations are uniquely vulnerable at times like these. Our desperate need is for someone who can raise an anti-corruption army, is prepared to control the unions, able to fix service delivery and able to make the difficult decisions that will allow job rich economic growth.

The darker and more dire things become – and goodness knows they are as dark and dire as anyone can remember – the stronger our wish fulfilment drive becomes.

Where is the good-looking one, with the strong jaw and the easy, comforting manner, and the very firm but gentle eye and the plan and the promise and the words – and the record, or at least one you can, in your desperation, convince yourself of?

This is the moment in which nice Germans welcomed Adolf Hitler and Spaniards General Franco. King Constantine II of Greece inducted the awful “Regime of the Colonels” in 1967 saying he was “certain they had acted in order to save the country” and there was a (brief) Argentinian sigh of relief when Brigadier-General Jorge Videla overthrew the execrable, incompetent and authoritarian regime of “Evita” – as popular culture has dubbed Isabel Martínez de Perón.

I am not suggesting that a fascist opportunist and criminal is about to present him or herself as the saviour from our woes – or that things are so bad that we risk losing our judgement and welcoming him/her into the stockade. Well, not yet.

But explicitly and implicitly various political factions and individuals have presented themselves as alternatives, and the solution to our current problems.

There’s Zwelinzima Vavi – and whatever kind of workerist paradise he represents – who heroically criticised the media appeals tribunal and has laid about himself with a stout cudgel at all the worst of the cabinet ministers and officials trying to stuff the last tasty bits of the family roast into their distended bellies. And he’s available next year.

Deputy Minister of Police Fikile Mbalula suggested (of criminals) we should “shoot the bastards!” and in so doing presents a kind of law-and-order (and anti-communist) alternative, clearly being supported by the ANC Youth League and tenderpreneurs everywhere.

Lindiwe Sisulu dresses nicely and would be excellent if we ever panicked enough to need a kind of Cleopatra/Boadicea empress to save us.

Tokyo Sexwale is getting the kind of press that suggests he is an effective anti-corruption campaigner and an excellent Minister of Human Settlements i.e. he’s clean and gives good service delivery – and he’s bright, presentable, charming, good-looking and available – very available.

(This added as an afterthought: don’t discount Kgalema Motlanthe as a sort of leftish compromise that we have grown used to and, obviously, Mathews Phosa with his charming Afrikaans poetry and his friendly demeanour and his market friendly comments and his bitter struggle with ANC leader and communist Gwede Mantashe. Also consider a scenario, one I discuss elsewhere, where none of the contending factions achieves dominance and everyone agrees to stick with the burdensome incumbent … all is still possible.)

The National General Council of the African National Congress (to be held in Durban from 20 – 24 September) will reveal the main factions and their key representatives for leadership. The last NGC resulted in a rebellion against Mbeki and foretold his rout at Polokwane. This one is likely to be as instructive.

The point I wish to make here is a simple one. Those who appear to offer solutions must be judged in terms of who they are, what they have done and what they really represent. Just because we are in trouble does not mean we can afford to lose our critical faculties. My long gone Granny would have had two more things to say on the subject: don’t throw the baby out with the bath water, and don’t jump from the frying pan into the fire.

* The title of this post comes from the glorious “Thunder Road” by the inimitable Bruce Springsteen (it doesn’t really fit the story … but I really love the song:

You can hide `neath your covers
And study your pain
Make crosses from your lovers
Throw roses in the rain
Waste your summer praying in vain
For a saviour to rise from these streets
Well now Im no hero
That’s understood
All the redemption I can offer, girl
Is beneath this dirty hood
With a chance to make it good somehow
Hey what else can we do now?

But anyway … here are the 4 most egregious examples of … of just general political awfulness from the last week’s political news:

1. Chancellor House gets another slice of the Eskom pie – and says: F*%& you, we can do what we like

The Weekend Witness (also City Press 27/04/2014) reports that Chancellor House, an investment arm of the ANC, has begun the purchase of Swiss-owned Pfisterer, a manufacturer of electrification components. Pfisterer is a major Eskom supplier and has a R550 million contract with the state owned power utility. The report alleges that Chancellor House will invest R34 million in a transaction that gives it immediate control of 49% ofPfisterer , and that Chancellor House will buy out the remainder over the next 18 months. Chancellor House’s Mamatho Netsianda told City Press: “If Chancellor House invests, it is not a crime. Why are you bothering me? We didn’t break any law. You don’t have a job to do. I have a job.” Hmm, nice work if you can get it.

2. State nuclear corporation channels public money to the ANC – and is about to adjudicate the biggest public tender in South African history

The Nuclear Energy Corporation of South Africa (Necsa), a wholly state owned entity recently paid R76 000.00 for seats at an ANC fundraising dinner. This quote from an unidentified board member of Necsa from the Sunday Times’s (26/04/2014) story: “We get money from government. How can we use it to fund the ANC?”

The deadly serious point of the article is that Necsa will soon be adjudicating bids for the R1-trillion nuclear build programme, the biggest public sector contract in the country’s history.

The country is still reeling from the corroding effects of the R30-billion Strategic Defence Acquisition finalised in 1999. Then deputy president Jacob Zuma was charged on various counts of racketeering, money laundering, corruption and fraud in the wake of the successful prosecution of his then financial advisor Shabir Shaik for charges that included the soliciting of a R500 000 (per annum) bribe for Jacob Zuma from a leading defence contractor.

3. No parliamentary scrutiny of Nkandla

The African National Congress yesterday quashed the parliamentary committee established to scrutinise President Jacob Zuma’s responses to the Public Protector’s findings on the R246-million upgrade to the Nkandla homestead. Opposition parties were furious, claiming ANC members of the committee were “submitting to the will of the (ANC) headquarters, Luthuli House, rather than following the oath they made to uphold the constitution, part of which was to keep the executive accountable.” Committee chairman Cedric Frolick said the next Parliament could resurrect the issue, a point non-ANC members of the committee felt was unlikely and certainly not guaranteed – Business Day 29/04/2014

This particular story gets worse: a key ANC member of the now disbanded committee said during a march in support of Jacob Zuma over the weekend that Public Protector, Thuli Madonsela, “is not our god”, regardless of being named as one of the world’s top 100 most influential people by Time magazine. “They can praise her good work, which is advancing the political agenda of the DA … We still reserve our right to expose that she is acting more as a politician and that she has brought that office into disrepute.” (City Press 27/04/2014) … which rather explains why the ANC has sunk the committee which was the last opportunity for government and the ruling party to acknowledge mistakes and culpability around the Nkandla upgrade. It is widely reported that the ANC is encountering, along its election trail, significant and harsh criticism from its own electorate about the Nkandla issue in all provinces except Kwazulu-Natal.

4. Sadtu accused of running jobs for cash racket

City Press published an exposé of allegations that the South African Democratic Teachers Union, a key Cosatu affiliate, had run a “promotions and appointments for cash” racket that “led to scores of illegal appointments” across the country – and at least one murder of a principal (City Press 27/04/2014). The article describes several situations in which principals were threatened with death to leave their jobs to make way for someone who has paid the R30 000.00 to occupy the job. The article implicates some Cosatu, Education Department and ANC officials and leaders in the scam. “On Tuesday, Mfundi Sibiya (54) the Kwazulu-Natal education’s department Ugu (lower South Coast) district director, two principals and an ANC ward councillor were granted bail … (after) allegedly ordering the murder of Nyon’emhlope Primary School principal Nkosinathi Zondi (46) … shot five times, allegedly by hitmen Andile Zulu and Lungisani Makhoba …)”.

The failing South African education system is an important constraint to South African economic growth, and a key component of this failure is Sadtu’s success in thwarting attempts by governments to properly assess and grade teachers and to link advancement to performance. The exposé in City Press suggests (but, it needs to be noted, does not prove) how deep and pathological is the impact of Cosatu’s Sadtu union on the failure of the system.

Stories that didn’t make the cut … because this whole exercise was starting to make me nauseous

Journalist Nickolaus Bauer photographing the handing out of ANC T-shirts from a traffic police vehicle, and then having his pictures forcibly deleted by a member of the SAPS VIP protections services.

Journalist Max du Preez’s accusation that Jacob Zuma “is using every trick he used while being head of intelligence for the ANC in exile in Angola and Zambia”. That he has “plunged the ANC back into its darkest era when commanders in exile issued the orders and cadres even remotely suspected of being hesitant or questioning were victimised, even jailed, tortured and executed.” Further that “the criminal justice system was perverted and abused and the powerful State Security Agency employed to make sure Zuma and his inner circle stay in power.” Catch the article here.

The allegation that emergency parcels (food, toiletries and blankets from the SA Social Security Agency) are being dished out at a certain political party’s rallies – no guesses, this is getting ridiculous. The allegations have been made to the Public Protector. Hmm what is it that MP Buti Manemela said? Oh yes: the Public Protector is “advancing the political agenda of the DA”.

(Note: please read Jonny Steinberg’s comments on my miscasting of the implications of the recent HSRC’s South African National HIV Prevalence, Incidence and Behaviour Survey, 2012. Jonny argues that I have taken “a story of resounding success and twisted it into a tale of alarm”. Jonny Steinberg is correct on all counts and I hope to redress my error at some time in the near future. Catch his brief criticism and my initial mea culpa in the comments section here.)

Before it gets too out of date, herewith my last week’s (Monday 14 April) news update … it’s worth it just for Ronnie Kasrils’s comments about Zuma.

Employment equity in South Africa is glacially slow and will continue to help drive regulatory and political uncertainty

A spoilt ballot campaign and some unusually forthright statements from ANC leaders about corruption in their party and government

Employment equity – dead slow ahead

Last week the Commission for Employment Equity released its 14th Annual report (available here) indicating glacial progress in making workplaces more representative of the demographic profile of the South African Economically Active Population (EAP).

Below is an indicator of race and gender breakdown of the working population as a whole:

Original Source: Statistics South Africa, (QLFS 3 2013)

In the report’s ‘Top Management’ category, the trend between 2003 and 2013 is strikingly poor:

Employment equity reports 2003 – 2013

(The report uses categories: Top Management, Senior Management, Professionally Qualified and Skilled. The Department of Labour begun collecting data on ‘foreign natlonals’ as a distinct fraction of the EAP from only 2006.)

The performance is best in the government sector, but this only slightly improves the overall picture:

Employment equity reports 2013

There have been some improvements at the lower end (Skilled Technical):

Employment equity report 2003 – 2013

However, not unsurprisingly, the Employment Equity Commission believes this is not good enough in itself, nor is it adequate compensation for failures elsewhere.

(The Commission is a statutory body that reports to the Department of Labour and operates within the aegis of Employment Equity Act, 1998 – amended by Employment Equity Amendment Act of 2013.)

So what?

Poor performance by the private sector in reaching employment equity targets is a constant irritant to government and to the ‘designated groups’ (Africans, Coloureds, Indians, women and people with disabilities). Employers might argue that the administrative burden of the act is counter-productive and that the top employment categories require skills that are relatively scarce amongst the ‘designated groups’. However, the political consequence of the failure gradually adds to the risks in the operating environment.

Employment equity legislation in South Africa has, since 1998, tended not to concentrate on sanctions to enforce compliance. However it is apparent that government is gradually increasing the pressure. The Employment Equity Amendment Act of 2013 increases fines for non-compliance – both with regard to reporting requirements and with regard to targets.

The African National Congress is increasingly challenged by radical populists (e.g., the EFF) and a militant left-wing (e.g., the incipient Numsa breakaway from Cosatu) which together argue that black South Africans have failed to adequately benefit from ‘liberation’. Part of the answer to this challenge from the ruling party is likely to be a rapid escalation of pressure around employment equity and Broad-Based Black Economic Empowerment.

There will be an increasing burden on all companies operating in the country and increased government hostility to defaulters. The ANC will not be tempted towards the nationalisation policy platforms of the emerging populist and leftist groups, but must find an answer that satisfies its constituency in the rapidly growing black middle class.

Spoiled ballot campaign

Ronnie Kasrils, a former intelligence minister, and long-time leader of the African National Congress, has embarked on a campaign with some other disaffected ANC members to call for a spoiled ballot in the May 7 election.

So what?

Nothing much, except that this is probably the tip of an iceberg of discontent in the African National Congress. Perhaps what is significant is that despite the emergence of the EFF and Numsa breakaways, and the apparent success of the DA campaign, many dissidents in the ANC still find themselves unable to follow a party other than the ANC.

Kasrils’s main problem with the ANC is what he perceives as a spread of serious corruption and abuse of public funds at a senior level in government and the party.

Obviously the strategic or tactical value of a spoiled ballot will be a matter of deep controversy.

(My own view is that Kasrils and his colleagues are well within their rights to propagate this option – it is, however, not an option I will be pursuing.)

Most interesting

What is most interesting is to read Kasrils’s comments about Jacob Zuma and other ANC leaders in the interview with published in the City Press yesterday. I quote him here in-depth, because of how unusually explicit his mode of expression is and because I believe this view is representative of a significant group of ANC insiders, deeply unhappy with their party, but not yet ready to leave it:

People will tell you and it has been stated from people in exile and I can confirm – (that) he (Zuma) was a pretty simple guy. He wasn’t a person who was looking for fancy clothes and flash cars. He was pretty down to earth … I did see a certain ambition there by acquiring so many feminine relationships and wives and then children … (But Zuma has) changed very dramatically. Here is a man who comes back to South Africa and you can imagine how worried he must have been, how he was going to take care of this kind of menagerie … And then there are the people, capitalists, with money in their back pockets, who were looking at the new political power and pounced like vultures … There were some who were only too happy in the embrace because they did not have to worry about the wolf at the door, how they would have to pay the bills, how they were going to educate their kids, where they find a way to house their women … from then on, what happens to your fine principles of serving the people first and thinking of the key things that are necessary when you are now in league, and in bed, with people who become your sponsors? From that point of view, you change.

My view is that the people who now run the ANC, not every one of them, but there is an elite that has become incredibly corrupt that managed to take over – take power from Mbeki and kick him out and it’s just been downhill ever since with this system just rolling on like a snowball becoming larger and larger.

Ronnie Kasrils, City Press 13/04/2014

(Again, my personal views on whether Mbeki, Zuma or none-of-the-above are the root of all evil might differ somewhat from Kasrils’s but I think his plain speaking here is useful anyway.)

Cosatu’s Central Executive Committee meeting on Tuesday last week was widely expected to be the close-to-final act in the trade union federation’s unravelling. However an ANC delegation led by Cyril Ramaphosa persuaded the Zuma loyalists as well the Zwelinzima Vavi-led faction to postpone a final showdown till after the elections. (Such a ‘final showdown’ is ostensibly about the suitability and prudence of the Vavi, but is actually about loyalty to Jacob Zuma to the ANC’s policy positions.)

So what

Again, it is interesting to note the interaction between fragmentation and momentum in the ruling alliance. The ideas and history (mythological or otherwise) that bind the members and supporters to the ANC make the split that is happening bizarrely protracted. However, there is no question that several splits in the ruling alliance are, in fact, in process. It is tactically important for Vavi and Numsa to hold on within Cosatu for as long as possible. Cosatu remains terrain which neither contestant feels ready to abandon to the other.

It’s the 1st of April and I have already seen that Helen Zille has accepted an ‘elecnomination‘ to spend two weeks living in Khayelitsha, surviving on the minimum wage and using a bucket toilet. Good for her, I say.

In other news the DA has announced that the Western Cape government it is going to upgrade Zille’s private residence in Cape Town. They plan to spend R20 million, but have wisely put aside R246 million in case of overruns. Nothing wrong with that … as we have seen elsewhere.

In entirely unrelated news the Sunday Independent carried a story about some polling apparently undertaken by the legendary Stan Greenberg on behalf of the DA.

Just as an aside: the headline in the Sunday Indepent calls Greenberg the “De Niro of politics”.

This is a picture of Stan Greenberg:

This is a picture of Robert De Niro:

Oh yes, now I get it. They are both white men, over a certain age …. (oh leave it alone! It’s not important, why don’t you just let it go? And anyway maybe there is a joke here you just don’t get – Ed)

Hmm, okay, sorry …

The DA polling was something of an antidote to an Ipsos poll commissioned by the Sunday Times and published a week earlier.

First the antidote from Stan, the DA and their various minions:

Then the Sunday Times Ipsos poll published March 22:

I am not, actually, saying treat this sort of thing with the same caution as you would treat an April Fool’s story. Both the pollsters have defensible and explicable methodologies … but clearly they can’t both be right.

In general I treat the polling with a degree of caution. Results are often leaked or announced with the intention of impacting on the final outcomes (by, for example, scaring voters and supporters into getting out to the voting booths or by bolstering the flagging energies of party workers).

I have used, as a sort of deductive shorthand, a ‘below 60 percent’ versus an ‘above 60 percent’ for the ANC as an indicator of a ‘danger zone’ for Jacob Zuma.

Instinctively I think the ANC will lose votes because of the leader’s breathtakingly cavalier attitude to public money and resources. The alternative would be for me to believe things about the average South African voter that I would feel uncomfortable about admitting in public. The average ANC member voted for Jacob Zuma as president of the party at both Polokwane and Mangaung … so there is nothing I need to say about that.

So … as part of my weekly review of SA politics yesterday morning I tried to collate some of the responses to the Nkandla Report with the specific intention of using these as an heuristic tool to gain some deeper insight into what is going on.

That’s just a fancy way of saying that when I am unsure of what is going on then I look around at the responses of people I suspect do know what is happening and try and extrapolate from that a greater level of insight i.e. I am using the responses as a heuristic tool … although as you will see in the link ‘heuristic’ means more than just an investigative short cut. It didn’t achieve what I hoped, but here are my truncated efforts anyway:

Responses to the Public Protector’s Nkandla Report reveal much, but not enough

Responses to Public Protector, Thuli Madonsela, ruling that President Jacob Zuma and his family directly benefited from the improper use of state funds in the (approximately R230m) upgrade to his (Jacob Zuma’s) Nkandla homestead and that he “failed to act in protection of state resources” are flooding in from all directions.

Obviously all the major opposition parties are using the report to attack the ANC and Zuma – and are generally deifying the Public Protector. However, the diverging responses from within the broad membership and leadership of the ruling African National Congress are the most relevant and interesting.

The party itself (and the SACP and the formal structures of the divided Cosatu) are essentially defending the President and/or attacking Madonsela (or the manner in which her report was delivered).

Several news media have attempted to list the number of ANC leaders and widely respected ‘liberation heroes’ who have in some way expressed both support for the integrity of the Public Protector and support for her findings. The list has included previous President Thabo Mbeki, Deputy President Kgalema Motlanthe, Defence Minister Nosiviwe Mapisa-Nqakula (although her problems were primarily with the sexist language of some of the criticism … and up till now I have seen her as something of a Zuma loyalist, so I will have to do some homework on this one), ex-minister Pallo Jordan, ex-minister Ronnie Kasrils and a host of other individuals (e.g. Ben Turok and Marion Sparg) and particular branches of the party and parts of individual unions of trade union federation ally Cosatu which have in some way defended the Public Protector and supported her findings.

So what?

‘Nkandla’ is, on the face of it, small change compared to myriad similar scandals surrounding the President.[1] The difference in this case is a ‘Chapter 9 institution’ (an institution established in terms of Chapter 9 of the South African Constitution to “strengthen constitutional democracy in the Republic”) has made findings that essentially allege that Jacob Zuma has improperly benefited from state spending and that while there is no proof that he engineered this outcome, he had a responsibility, according to the Public Protector, to be aware that it was happening. These might be ugly, but not exactly impeachable offences – unless you believe they are purely the tip of a much larger iceberg hidden through luck, trickery and a good legal strategy.

There are so many issues that this raises, but I will mention only 3:

Firstly, does the ANC lose votes because of this? More precisely: does the release of the report just over a month before the election lose the ANC more votes than it would have lost anyway as a result of its president’s … how should I put this … now very widespread reputation for poor judgement with regard to his private financial affairs? I would guess ‘yes’.

I have no doubt that there are vast groups of voters who see Madonsela’s report as just another attack on their candidate and who will be completely unmoved by the details. I also suspect that there is a large group that despise the ANC leadership choices but will stick with the party in the belief that it will self-correct sometime soon. However, there are obviously those for whom Madonsela’s report is the proverbial straw – but I suspect this is a marginal group. If the margin is between 60% and 59% then Madonsela’s report could make an important difference. If it is between 63% and 64% then, voting wise on May 7, it is not going to make much difference.

Secondly, the ANC has benefited from occupying the high-ground of moral authority. Whatever its failings it was always the party of national liberation, the party of Nelson Mandela, the party that embodied the majority of black South Africans’ struggle for self-determination and against apartheid – unimpeachable and morally irresistibly aspirations and goals. The voices of disquiet from within the party are beginning to suggest that this objective or record has been redeployed in a baser struggle.

Listen carefully to the coded and heavily portentous words of Thabo Mbeki talking at the 20th anniversary of Wiphold at Sun City on March 22 2014:

“Regrettably, today, a mere 20 years after our liberation, it is obvious that many in our society have forgotten or are oblivious of the human cost our freedom entailed. Accordingly, these abuse the gift of our liberation to abuse our precious freedom to do things for themselves whose only objective is personal aggrandisement – thus to use their access to state, corporate and social power radically and systemically to subvert the required sustained and speedy advance we need towards the realisation of the objective of a better life for all our people.”

The Public Protector’s report is reverberating through the ANC (see key ANC intellectual and former cabinet minister Pallo Jordan’s column in the Business Day for another example) and forcing many of the ‘old guard’ to take a public stand. In almost all cases the criticism is unspecific and is being made by people who no longer occupy key positions in the party or state. However, there is a cumulative loss by those who hold central power in the ANC of moral authority. Without moral authority, hegemony must be won with patronage, manipulation, blackmail and force. The ANC is still close enough to its ‘liberation roots’ for such a changing of the guard to cause serious, even dramatic, ructions amongst the party faithful.

Finally, Jacob Zuma has been (significantly) responsible for growing ANC electoral support in Kwazulu-Natal from 33.33% in 1994 to 63.97% in 2009. The province has a population of 10 456 900 people (second to Gauteng which has 12 728 400 according to the 2011 census). Kwazulu-Natal is now a key ANC stronghold and the only province where the party’s electoral support grew during the 2011 municipal elections. More than a quarter of the party’s total membership comes from the province. “On Friday, thousands of ANC supporters wearing yellow T-shirts emblazoned with the words “Hands off Zuma’ marched in Port Shepstone on the south coast … after eThekwini did so earlier this month” – (City Press 30/03/2014). If, as we suspect, Jacob Zuma’s lifestyle and probity issues are losing the ANC a degree of support in many, especially urban, areas of the country but that his personal support is continuing to grow amongst isiZulu speakers in rural Kwazulu-Natal, the party will face the further corroding influences of regionalisation and tribalism. My suspicion is Zuma’s vote pulling power in Kwazulu-Natal peaked in 2011, but only May 7 will put that to rest one way or another.

[1]Jacob Zuma’s financial advisor Shabir Shaik was sentenced to two 15 year terms in prison after he was found ‘guilty of corruption for paying Zuma 1.2 million Rand (US$185,000) to further their relationship and for soliciting a bribe from the French arms company Thomson-CSF, as well as guilty of fraud for writing off more than R1 million (US$154,000) of Zuma’s unpaid debts” – http://en.wikipedia.org/wiki/Schabir_Shaik_trial accessed on 30/03/2014 at 21h17 CAT

(Just as an aside before I start: I couldn’t help but smile at Richard Poplak’s seriously over-the-top take on the Nkandla report in Daily Maverick this morning: “But Madonsela has certainly nailed Zuma to history’s grimiest post—he will be forever remembered as a thief, a fool, and a Zulu man who was incapable of managing the affairs of his kraal … Jacob Zuma will not escape his fate as one of this country’s more reprehensible figures. And Nkandla will be the crown he wears as he slithers into historical ignominy” … anyone who reads this column probably realises that I am not overly enamoured of Jacob Zuma as our president, but Richard seems to think he is a sort of Vlad the Impaler in leopard skins, which I think is a metaphor too far.

… and while I am making asides did I just hear Gwede Mantashe throw Riah Phiyega under a bus for the fire pool/swimming pool confusion in the Presidential mansion? So she is going to take the fall for Nkandla and Marikana? Shem, as they say on Twitter.)

… anyway:

South Africa’s Public Protector ruled that President Jacob Zuma improperly used state funds to upgrade his Nkandla homestead and “failed to act in protection of state resources”.

The Public Protector said Mr Zuma’s behaviour amounted to misconduct, but that she couldn’t conclude that the president had misled parliament. He will have to repay some of the funds.

The report is negative for the ANC and will cost it votes in the May general election.

Trevor Manuel’s exit from parliament has not been quite as smooth and painless as it first appeared. He will end up as a public critic of the ANC, but not, as yet, in an opposition party.

A thickening seam of discontent and activism opposed to growing government intervention in the economy is beginning to reveal itself in the South African financial press.

Zuma deemed guilty of misconduct, but not of misleading parliament

After a 28-month investigation, South African Public Protector Thuli Madonsela announced that President Jacob Zuma and his family had improperly benefited from upgrades to his private Nkandla home worth around ZAR 246mn. “Expenditure on Nkandla was excessive,” Ms Madonsela said and involved the “misappropriation of funds”.

Ms Madonsela said President Zuma knew of the scale of the Nkandla project and “failed to act in protection of state resources”, allowing extensive upgrades beyond security. She explicitly said Mr Zuma’s failure to protect the state’s interests during this saga amounted to “misconduct”, that his failure to protect state resources was a “violation” (of what we are not exactly sure yet) and that his conduct had been inconsistent with the constitution. However, she said that he did not wilfully mislead parliament on the matter. That would have been a criminal offence.

Mr Zuma will now have to respond to these findings to parliament within 14 days and repay some of the misappropriated funds. It doesn’t look like anyone will go to prison or be forced to resign and the actual practicalities of the crisis are not desperately serious for the ANC and President Zuma (or rather not in a new way … they were already quite serious in terms of general respect for the integrity of the President.)

So what?

Ms Madonsela recently described the function of the Public Protector as being to “curb excesses in the exercise of state power and control over state resources”. However, there is some confusion as to the status of her rulings and consequent recommendations to the president for remedial action.

Getting President Zuma to take remedial action against himself for the misuse of public money would seem like something of a non-starter. Already, ex-police chief Bheki Cele, former minister Dina Pule and Agriculture Minister Tina Joemat-Pettersson – all of whom had adverse findings against them by Ms Madonsela – have found their way onto the ANC’s election list.

Still, this is very much a negative for the African National Congress (ANC) – even more so than the general public expected, though probably not more than the ANC expected. The party knew the report was going to be damaging and has been stiffening its spine for some time, weighing up the costs of attacking Ms Madonsela – an illegal act – or taking it on the chin.

The party will lose votes as a result of this, but we think it was losing votes anyway because of Mr Zuma’s general probity (please see our most recent rough guide overleaf for an idea of how we think support is shaping up). Mr Zuma’s position in the ANC will be weakened (but remember he is strong in the sense that he controls the majority of powerful ANC structures).

Still, the brand value of the ANC is being damaged and this is likely to trigger a self-correcting mechanism. While the changes are still 40-60 against, we think a rescue mission by the party’s ‘old guard’ is now more likely and that it might successfully mange to shift Mr Zuma aside by around 2016 (a sufficiently strong group just needs to emerge that can cut him a deal with proper guarantees). Obviously the worse the ANC does at the polls, the more the under performance is ascribed to the character and probity of the president … the more likely it is that such a group emerges and coheres to a degree that it is able to offer any enforceable guarantees.

Trevor Manuel: Concealed weapons

Last week, warm tributes were paid to former Finance Minister Trevor Manuel as he took his leave of parliament and it appeared that his sometimes fractious relationship with his party and cabinet colleagues would, for once, be smoothed over. However, in a high-profile Sunday Times interview, he proceeded to warn that “attacks on public bodies, such as the Public Protector and the courts, would weaken these institutions — and that democracy would then battle to survive”. ANC Secretary General Gwede Mathanshe responded sharply to Mr Manuel, saying: “We do not attack the public Protector, but criticise her where we feel we should … Trevor refuses to participate in the activities of the ANC NEC, and if you refuse such, you want to be a free agent.”

So what?

Trevor Manuel has been something of a ‘market darling’ and (according to himself and in his own words) the rand “fell out of bed” when the news broke that he had resigned after Thabo Mbeki had been recalled on 22 September 2008 (The Zuma Years, Richard Calland, August 2013, Zebra Press … read it, it really is quite good!!). There is no love lost between the country’s longest-serving finance minister and architect of the National Development Plan (NDP) and the incumbent leadership of his party.

In a coded farewell speech in parliament, he quoted a seemingly benign passage from a work by historian Tony Judt: “For thirty years, we have made a virtue out of the pursuit of material self-interest: indeed this very pursuit now constitutes whatever remains of our sense of collective purpose.” There were knowing nods all around, but Mr Manuel usefully forgot to mention the title of the book he was quoting, Ill Fares the Land. We expect Mr Manuel to emerge as a critic of the ANC in its present form, although he is unlikely to join any of the existing opposition parties.

Mr Manuel was also interviewed by the Business Times, in which he criticised the short-sighted way in which some trade unions were approaching negotiations, saying it has sparked a “race to the bottom”. He accused National Union of Metalworkers of South Africa (NUMSA) General Secretary Irvin Jim, who has constantly attacked the NDP, of “speaking a lot of rubbish”.

Mining companies told to “get off their knees” and stop sucking up to government

Tension in the mining sector under the twin pressures of serious labour instability and increasing government regulatory pressure is causing unusual fractures and pressures, according to Business Day and the Sunday Times, provoking something of a growing campaign of activism in some sectors of the ‘private-sector intelligentsia’, for want of a better term. Here are some of the highlights and lowlights of the tension (it gets complicated, but stick with it):

Eight weeks ago, a respected Chamber of Mines negotiator in the platinum strike (now in its eighth week), Elize Strydom, said Commission for Conciliation, Mediation and Arbitration (CCMA) mediators in negotiations between employers and the Association of Mineworkers and Construction Union (AMCU) had ”showed an absolute lack of economic acumen” by suggesting companies meet the AMCU’s wage demands “half way”. The mediators had suggested they accept a rise of 25-30% for entry-level miners with basic pay of ZAR 5,700 (the AMCU had demanded ZAR 12,500 a month, a rise of 120%, the companies had offered 8.5%).

Ms Strydom (and the Chamber) were immediately attacked by the CCMA and accused of ‘‘white-anting” the mediation process. The CCMA insisted the Chamber either apologise or endorse Ms Strydom’s comments. If the Chamber did endorse Ms Strydom, in the words of the CCMA, it would indicate that the Chamber clearly had “no faith in the institution that is made available by the state and which is accepted by all social partners in other economic sectors”.

Business Day editor Peter Bruce says in his Thick End of the Wedge column this week: “But the mines did nothing. Until, that is, they flung themselves into the arms of the state and savaged Strydom for what she had said … A depressing scene.” Mr Bruce’s comments, bitterly critical of the Chamber and the mining firms, underpin Rob Rose’s column in the Sunday Times, in which he says: “So, when some maverick breaks the conspiracy of silence, it’s no surprise that there’s a hullabaloo of outrage. Spin doctors reel blindly … the gutless Chamber of Mines, and the even more enfeebled legion of platinum CEOs [fail to take a stand]. Now, this is why this issue is so important: the platinum industry is on a precipice. Workers have been on strike since January 23 and the mines have lost billions in revenue and even more in terms of international investment goodwill.”

Also in the Sunday Times, a report on the Mineral and Petroleum Resources Development Act (MPRDA) amendment bill says “the ANC rushed through controversial changes … that opposition parties feel will create further uncertainty in the mining sector.” The article notes that the new regulations will give government the right to a free stake of up to 20% in any new oil and gas projects, with a right to acquire the rest at an “agreed price”. The story quotes the Democratic Alliance’s James Lorimer as saying that only “cronies, comrades and cousins” would benefit from the bill, which he said would “severely damage” the industry. Mineral Resources Minister Susan Shabangu said critics were resisting change and transformation, “representing white minority interests” and “wanting to sell the country’s natural resources to the highest foreign bidder”.

So what?

The Chamber of Mines said that “while further work is required on developing the regulations that will help give effect to the MPRDA Amendment Act, the chamber is firmly of the view that through this problem solving process, greater regulatory certainty is emerging for the mining sector.” Obviously, for the Chamber and the companies engaged in negotiating the details of legislation and regulation with government, or engaged in the constitutionally created structures of the labour market, there is no upside in attacking the government or the institutional framework. Equally obviously, key sections of the financial press disagree and are essentially sounding a call to arms and arguing that the growing institutional, regulatory and legislative hostility to the private sector is becoming a crisis.

“How seriously to take the EFF is becoming the question of the year for a view on South African political risk”

As I listened to Pravin Gordhan’s budget speech I thought I would share with you an extract of my news commentary from Monday morning.

But I forgot to hit ‘publish’ as I was being torn between being slightly underwhelmed and moderately admiring that Gordhan could make so few populist concessions this close to May 7.

Thus, the EFF and DA manifesto launches:

The Economic Freedom Fighters and The Democratic Alliance both launched their manifestos this weekend

The EFF will likely out-perform and its policies are the ‘sum of all fears’ for investors in emerging markets

In the longer term, however, the ANC is set free to pursue more growth orientated, investor friendly policies – and success or failure in this regard is the key question about South Africa’s future

The Democratic Alliance also launched its manifesto and is rapidly shifting its demographic appeal

By 2019 we could have a Goldilocks scenario where the ANC and the DA comfortably occupy the middle ground of South African politics, keeping at bay both the left and right-wing, and pursuing economic growth. Other scenarios are both possible and plausible, but I thought I would, just this once, hope for the best

EFF – radical left-wing populism of old (and marketing genius)

The EFF packed out the Mehlareng Stadium in Tembisa in Gauteng and launched a radical populist manifesto with great aplomb. Ambitious plans announced included free education up to tertiary level for all and double social grants paid for with the proceeds from nationalising 60% of the mines and banks. The party will build a state pharmaceutical company to produce medicines, scrap the tender system, ban the use of consultants while increasing civil servant salaries by 50% and it will subsidise the taxi industry and provide housing finance for middle-income earners. Mineworkers will take home a minimum wage of R12500.00 a month (undoubtedly designed to chime with current Amcu platinum sector strike) and other minimum wages would vary from R4500.00 for waiters and waitresses to R7500.00 for private security guards.

Yeah, right.

To get a sense of the scripting and impact of the launch here is Ranjeni Munusamy of The Daily Maverick describing the Marikana widows on the platform: “To make the point about the treachery of the ANC government, Malema had invited as his special guests the widows of the Marikana massacre, all clad in EFF t-shirts. They sang and spoke of the hardship, their heartbreak and the betrayal they feel at the ANC government killing their husbands on behalf of capital.”

So what?

The EFF is becoming the big story of this election. Previously in SA politics the ANC managed to encompass within itself the full spectrum of liberation ideologies including this radical populism. The expulsion of Julius Malema (paralleled by the pushing of Numsa out of the ruling alliance) has left the radical populists on the outside and unconstrained by previous alliances and loyalties.

The ANC ran a counter rally/concert aimed at a youthful audience not far from the EFF manifesto launch. While that concert/rally was well attended and festive, it didn’t appear to detract from the EFF launch. All it really indicated was that the ANC is taking the EFF threat seriously.

How seriously to take the EFF is becoming the question of the year for a view on South African political risk. The EFF is articulating the set of demands and occupying the political space that has always been of concern to investors in South Africa – characterised as it is by chronic unemployment, poverty and inequality with the racial underpinnings of apartheid. Previously markets had become convinced that the ANC by its size and reach and general authority, was able to mediate between the different and competing demands of the transition.

However, it is now clear that the ANC has either been forced to abandon the terrain of the radical populists and ultra-left and expel those factions – or it has chosen to do so for its own strategic objectives.

On the one hand this sets the ANC and government free to develop policy without the straitjacket that came from clinging to the populists and leftists. On the other, those groups are now free to compete for votes and the ANC is vulnerable to electoral shrinkage.

The EFF will undoubtedly grow, but the question for me is: ‘can the ANC, in the longer-term, now find policies to grow the economy that will allow it to regain ground in the 2019 election that it is likely to lose in the 2014 election?’

Meanwhile I think the EFF will do better in this election than expected …. and I am moving my expectation for its electoral performance up from 8% to 10% (a thumb suck, rough guide, purely for me to keep track) of the total vote on May 7th. I do, however, think that once the EFF gets to parliament the unworkability of its policies and the manipulations inherent in its campaigning will inevitably be exposed. Over the longer term it could be under pressure to hold onto its parliamentarians and its voters, especially if the ANC is pushed by the pressures from left and right into a process of internal renewal … and especially if the Cosatu unravelling results in a real labour/left party.

The Democratic Alliance

The Democratic Alliance also launched its manifesto this weekend – on Sunday in Polokwane in Limpopo Province. The launch was well attended – with an almost exclusively black audience, a feature which puzzled many commentators (but not you?- ed)

The party was at pains not to attack the pre-Zuma led ANC with Helen Zille saying of the ANC’s 2007 Polokwane conference ‘(t)hat was the moment when a great political movement lost its sense of direction. It was hijacked by leaders who care more about themselves than the people they are meant to serve … (the) good story ended in 2007.’

The economic aspects of the election platform emphasised job creation: ‘The manifesto we release today is a ‘manifesto for jobs’… Job creation is only possible if we cut corruption’.

The manifesto is worth reading and pushes all the right buttons balancing state encouraged redress with laying the conditions for private sector led growth. Catch Helen Zille’s speech, which is a useful summary of the manifesto, here.

So what

The DA appears to be on top of its game and performing optimally, given the limitations imposed by its origins as a largely white party. The ‘ethnic’ or ‘racial’ character of the DA is clearly in transition, with Helen Zille the only white person who took the stage and the cameras covering the launch having to search long and hard for the few white faces in the audience. These contortions are going to be difficult.

The DA has clearly decided to appeal directly to defecting ANC voters and much of the tone and approach was structured with this in mind – including being respectful of the pre-Zuma ANC history. However it is my impression that defecting ANC voters are (mostly) going to abstain from voting or will vote EFF (and maybe UDM/COPE leftovers). I think that while the DA might get a portion of these votes the ‘racialisation’ of our politics means it is too early for the DA to capture enough black votes to shake the ANC.

However, I think the political realignment’s now taking place could mean that it will be the ANC and the DA that occupy the middle ground of South African politics by 2019, a scenario that has many more positive than negative features. (I wrote that line on Monday morning. I am not sure I agree with it still. Nothing has changed except my mind.)

In passing I should note the strong convergence of two features of both the DA and the EFF. They have both identified Jacob Zuma as the key individual responsible for the ANC’s and the country’s failures. True or not, fair or unfair, the ANC must be under pressure to find ways of shifting this president into the side-lines – which is, in my opinion, one of the features necessary for the emergence of a process of renewal in the ANC.

This is a quick aside before getting onto the more riveting topics of the May 7 elections, service delivery protests (and their search for a Gene Sharp handbook as well as the predictions of the Davies J-curve), the platinum strike, Julius Malema’s sequestration hearing in the North Gauteng High Court this morning (and the pressing matter of whether this could bar him from becoming a member of parliament in terms of section 47c of the Constitution) and the truly interesting Ipsos comparisons of the demographic characteristics of supporters of the ANC, the DA and the EFF.

Out of the mouths of babes and sucklings**

Over the weekend a young, close relative of mine wondered aloud why South Africans continued to vote for the ANC.

The child explained to me late on Saturday night that the ruling party was an institution so obviously bereft of redeeming features that only a person on drugs could possibly continue to vote for it.

“Why don’t they vote for another party?” asked the child in exasperation.

I have to admit that while I recognised the opportunity was begging for a cautious and loving Socratic exchange, I couldn’t raise the enthusiasm to give more than an exhausted ‘who’s they‘, followed by a quick retreat and request a continuation in the morning.

The next day, having completed the obligatory 52 hours (I think that’s about how long it takes?) of newspaper reading, I found myself sitting beside the same child watching Adventure Time on television.

When the charming, nuanced, off-beat and deeply intelligent (in comparison to other media I had been consuming that morning) cartoon was over, the child switched off the television, turned his angelic face towards me and asked: “so, about the ANC …?”

I cleared my throat and gathered my thoughts.

“White settlers from Holland” I began, gazing into the middle distance with a faintly sad expression on my face, as if watching the mournful parade of our history playing out in my mind, “first came to South Africa in 1652 and many bitter struggles were fought over land and cattle.”

Jumping ahead somewhat I went straight to the nub: “On January 8th 1912, chiefs, representatives of people`s and church organisations, and other prominent individuals gathered in Bloemfontein and formed the African National Congress. The ANC declared its aim to bring all Africans together as one people to defend their rights and freedoms.”

Okay, I’m messing with you … that’s a cut-and-paste from ‘a brief history of the ANC’ on the organisation’s website.

However, I find it significant that I had to open the web page and read some of the highlights from there. Somehow the essential story, the glorious history of the glorious struggle for freedom and democracy, the dead heroes, the banners, the flags and the songs, sounded tired and clichéd and faintly hackneyed as I ran through it without much real enthusiasm.

But I still argued the toss. It was not surprising that most black South Africans who were registered to vote would still be voting for the ANC (and, btw, ‘most black South Africans registered to vote’ was still probably ‘most South Africans of voting age’ given both our demographics and our 77% voter registration). The ANC led the fight against Apartheid. The ANC has presided over massive and ongoing redress in favour of black South Africans since 1994! A few bad eggs in the leadership do not change that.

(I suspect the ‘child’ is imaginary, a clunky rhetorical device … also, ‘duh’ means ‘give me a break’, or ‘don’t waste my time with the stupid and obvious’ – Ed)

The child’s arguments asserting the extremely putrid state of the ruling party became louder as did my insistence that the majority of voters were not brain-dead zombies acting out a destructive and unconscious impulse.

From the vantage point of this Monday afternoon I worry that I sounded a little like a master of ANC Apologetics ; but the child, delightfully, sounded like a shorter, skinnier, cleverer and more charming Wilmot James.

I obviously didn’t answer the question why do the majority of South Africans still vote for the ANC? to the satisfaction of he who asked it – although I am equally satisfied that I can understand why a majority of normal, sane black South Africans, acting in their enlightened self-interest, might vote for the ANC.

However what I didn’t say in the argument with the child is that I am also sure that along the path down which the ANC is currently travelling, with Nkandla (the political/economic/security faction rather than the homestead) leading the way, awaits a place or a moment at which the ANC will lose the support of the majority of free thinking, free voting* South Africans. Of this I am convinced. I think that moment is some distance ahead – only conceivably first appearing in 2019.

But who walks blindly towards catastrophe, when it is visible, predicted by one’s own forecasting, evident in every stumble along the deteriorating path?

Think about the ANC as having a brand value. Think about the forces that operate within the ANC as a kind of political market. I am hopefully expectant that that market will automatically self-correct … that the brand is so valuable that the threat of its loss will trigger a protective impulse, will mobilise the many who have much to lose if their asset continues to be led and used in the manner it is being led and used by its incumbent central leadership.

Obviously the incumbent leaders of the ANC will not willingly lose control. The consequences for this particular crew would be more negative and profound than, for example, a similar loss of control was for Thabo Mbeki. Also the incumbent leadership has a security/intelligence/street-fighter thing going that could make it a vicious and dangerous opponent of any serious movement for renewal within the party.

Finally, I imagine that the fewer votes the ANC receives in the May 7 election (which I don’t see being fewer than 60% of the total) the more likely and vigorous will be an attempt to change the organisation’s current trajectory and leadership.

(I am not going to run all of that passed the aforementioned child – he will, with some justification, roll his eyes and say whatever.)

* I use the “free thinking, free voting” qualification because it is not an eternal given that we will remain, as we have been (only briefly, since 1994) free, or relatively so, to think and vote as we please.

**’Out of the mouths of babes and sucklings’ comes from Matthew (21:16) recalling the words of Jesus, who was in turn referring to Psalm 8 – from the King James Version, a widely admired (for its literary value) English translation of the Christian Bible … that’s for any readers in a geographical, cultural and/or technological location so remote that even Google cannot help them as it has helped me fake that I knew the full origin of the phrase before I sat down to write this morning.

Herewith some comments on the latest political news. Apologies that I have posted so seldom here of late. I see a New Year’s resolution coming on. I see a New Year’s resolution exiting stage left.

Numsa, Cosatu and the SACP … and Jacob Zuma

During this past week the National Union of Metalworkers of South Africa (Numsa) shifted closer to exiting the ruling alliance (and possiblyCosatu). The matter will be decided at a special Numsa congress from 13-16 December.

Meanwhile several distinct forces entered the fray.

Gwede Mantashe, the powerful ANC secretary general, argued that if pursuing Zwelinzima Vavi split Cosatu, then that strategy should be reconsidered. His general approach was supported by the President of the National Union of Mineworkers Senzeni Zokwana calling for sober heads and for the two main factions in Cosatu to ‘swallow their pride and solve their ideological and political differences’ (Business Day 3/12/13)

In complete contrast to this attempt to mend fences, Blade Nzimande, wearing his South African Communist Party secretary general’s cap on Sunday attacked the Numsa leadership, using strong and unbending language saying a “clique” within the union is manipulating rank and file members for personal gain and should account for their personal wealth … that Numsa general secretary Irvin Jim and deputy general secretary Karl Cloete should submit themselves to independent lifestyle audits and that Mr Jim should explain his role in chairing the Eastern Cape tender board and should come clean on the work of the union’s investment arm.” (News24 02/12/13)

The Numsa leadership meanwhile continued with its formulation of a detailed criticism of the ANC performance in government – only parts of which have been announced – but will form part of the discussion about whether to stay in Cosatu and in the alliance at the special congress in mid-December.

The Eastern Cape provincial executive committee of Cosatu (PEC) has strongly criticised the Cosatu president Sdumo Dlamini for failing to arrange the special Cosatu conference designed to address all the issues bedevilling the federation, including the suspension of Vavi and the relationship with the ANC. The Eastern Cape PEC was also strongly critical of the Communist Party’s attack on the Numsa leadership.

So what?

This is not only the untidy squabble it appears.

Jacob Zuma came to power backed by the SACP, by Cosatu, by the ANCYL, by disparate regional power-blocks and business groups who saw an opportunity to get the benefits of being at the high table, and by democrats within the ANC who believed Mbeki had become authoritarian and/or unresponsive to the changing requirements of the situation (with his failure to grapple with the HIV/AIDs question his most obvious failing.)

This alliance of interests and groups has long since fragmented (with the trajectories of Malema and Vavi the most visible signs of this), but the SACP remains up close and personal with Zuma, his family, his business friends and the security agencies he keeps firmly under his wing. That it is the SACP who has said: ‘let’s chase these Numsa fellows out’ is not a surprise, as the SACP is one of the main beneficiaries of the rise of Jacob Zuma … an attack on Zuma is an attack on the SACP.

(My implicit assumption, which might be wrong, is that the SACP probably has some socialist explanation or justification for what it is doing in bed with Zuma. However I must confess I cannot imagine a version of politics in which the struggle for socialism is best served by allying oneself with a corrupt, regional elite – with ethnic overtones – that makes free use of the state security apparatuses to secure its dominance. If you lie down with dogs you should expect to get fleas.)

Thus, the SACP appears to be pushing for radical intrusive surgery on Cosatu and Numsa. They hope to cut out the cancer and, supposedly, slowly repair the healthy body left-behind.

The most obvious dangers are inherent in the metaphor: namely that the cure could kill the patient. But the bigger danger is that what the SACP, and the faction within the ANC that backs the radical surgery option have, perhaps wilfully, mistaken ‘democratic criticism’ (albeit of a damning sort) for cancer. This was precisely the warning that Mantashe and Zokwana were giving when they were brutally cut short by Blade Nzimande wielding a meat-cleaver.

So Nzimande and the communists have an agenda tied much more closely to the narrow version of the Nkandla Crew (that nexus of commercial interests, regional Kwazulu-Natal politics, state-security agencies and crime intelligence that are all pushed up tight against their principal, Jacob Zuma). More closely, that is, than, for example, Gwede Mantashe

Where this is leading is uncertain. It seems likely that Numsa will split from (or be driven out of) the alliance and perhaps from Cosatu. Numsa might more explicitly move towards establishing a ‘labour’ or ‘workers’ party, perhaps in alliance with existing left-wing parties and trade unions. Numsa itself may split in this process, so that a vestige of its former self is left behind in Cosatu.

Numsa freed from the constraints of belonging to the alliance and Cosatu has strong growth potential, particularly in the mining sector and can be expected to flourish there. It is not inconceivable that a defected Numsa will continue to lobby Cosatu unions and will grow as structures and regions of Cosatu unions also defect.

It is always possible for the ANC aligned leadership to stop this process, but that would entail having to give free rein to Jim and Numsa’s brutal criticism of ANC corruption and economic policy. The Nkandla Crew have obviously decided this is no longer an option – especially in the lead-up to an election where their principal is already under attack for public resources being lavished on his Nkandla home. Time will tell if they are strong enough to hold the smaller fort they have built against the growing number of enemies they are createing.

Meanwhile we must remember that Numsa is the most radical and best organised union in Cosatu – and many businesses would find them significantly less playable than the unions to which they are accustomed.

The next step will be the Numsa special conference. I expect Numsa to resolve to insist that Cosatu holds a special congress before elections next year. It is not impossible that that Cosatu special conference does take place and that the pro-Vavi faction secures his return – although there are almost endless practical difficulties in making this happen. However, any return of Vavi and and outbreak of peace in Cosatu will be temporary – unless there are radical changes in the ANC as well.

Draft of the Public Protectors report on the Nkandla build was leaked by the Mail & Guardian

The leaked report states that Jacob Zuma derived “substantial” personal benefit from the Nkandla upgrade that went way beyond ‘security features’ and that he would be liable to pay back this money to the public purse. The features Madonsela identified as unrelated to security spending was a swimming pool, visitors centre, amphitheatre, cattle kraal, marquee area, extensive paving and new houses for relocated relatives. Public Works allowed Zuma’s architect ‘uncontrolled creep’ to broaden the project until another 4 firms that Zuma had privately engaged were effectively carrying out the Public Works’ security upgrade but without having tendered for the job – and reporting back into Zuma and his architect (Mail & Guardian 30/11/13)

So what?

Mandonsela has come out strongly against the Mail & Guardian for having published the draft report. She says the confidential circulation of draft reports from her office is designed to allow interested parties to argue points and correct substantial errors. The Mail & Guardian argues that the public interest outweighed the internal processes of the Public Protector – given that the security cluster of government had regularly threatened to stop the report being published.

The more important question is how Jacob Zuma comes out of this. It is now impossible to avoid the fact that significant state resources were used on the President’s private residence and more and more details will surface as we head towards the elections in 2014. Leaks are appearing from the major party’s polling processes that suggest that the ANC is vulnerable around the Nkandla upgrade. If the ANC were to suffer electorally from the appetites of its president, and if it knew that its suffering was linked to those appetites, then we must assume that Jacob Zuma would be vulnerable. But vulnerable to impeachment or vulnerable to having his wings-clipped? It’s a big difference, but both should be items on our long-range screens.

I will make a decision on the caption competition soon, but meanwhile here is my latest news update and summary – the Madonsela story continues to grow and, frankly, should be encouraged to.

The Public Protector clashes with Zuma’s security chiefs

On Friday state security agencies abandoned their urgent interdict in the North Gauteng high court attempting to prevent the Public Protector Thuli Madonsela from a limited release of her report into the R206 million upgrade of Jacob Zuma’s Nkandla private residence. However Nathi Mthethwa (Minister of Police), Siyabonga Cwele (Minister of State Security) and Thulas Nxesi (Minister of Public Works) have indicated that they still expect Madonsela to bow to their various ‘security concerns’ – something the feisty Public Protector is unlikely to do. (She was speaking a few minutes ago, bemoaning the fact that she ever handed the report to this cluster of … securorats? … catch a preliminary reports of that here.)

Madonsela has used the security cluster intervention to ensure that a new key piece of evidence becomes public, namely that Jacob Zuma privately appointed Minenhle Makhanya Architects (who had no security clearance) to run the Nkandla project, but that the company was paid (upwards of R18 million) by the state. It will be increasingly difficult for Zuma’s security chiefs to sustain the argument that their ‘real’ concern about the report relates to whether it (the report) compromises the president’s security or, in fact, that the upgrade was essentially or mainly about the president’s security.

So what?

Jacob Zuma might be the quintessential survivor, but in the lead-up to a national election the strong indication that he and his family have personally and directly been the recipients of irregularly redirected state resources could be a serious problem for him and his party. The Sunday Times (17/11/2013) lead editorial is headed: “A suspect president and his questionable lieutenants” … the degree to which Jacob Zuma’s excesses make the ANC look bad is the degree to which he is vulnerable.

The EFF – running out of red berets just as Julius Malema goes on trial for fraud and corruption

The EFF cannot keep up with demand for its signature red berets, according to City Press

The dilemma faced by Julius Malema’s new Economic Freedom Fighters (EFF), is that while the new party appears to be performing well there is a real possibility that some of the leadership could be in prison before the 2014 election. City Press, in its front page lead story (17/11/2013) reports of the growing EFF support: “(t)hey can be seen wearing their red berets on street corners, in public places, hangout spots and even at funerals where they go to recruit new members”. The Sunday Independent, however, points out that Julius Malema will go on trial for fraud, corruption, money-laundering and racketeering at the Limpopo Magistrates Court today – and that 3000 EFF supporters were expected outside the court.(Julius’s case has since been postponed till September next next year – which means he will be firmly in the running next year.)

So what?

I have had to constantly upgrade my estimates of how the EFF might perform in the 2014 election. I previously indicated my rough forecasts and promised that from time-to-time I would update my view. Well, here is my latest guesstimate:

To do as well as I indicate here the EFF would have to pick up previous ANC defectors (from Cope and the UDM) as well as a significant number of first time youth voters. The EFF remains the part of the story about which I am least confident – although strictly none of these figures can pretend to any scientific validity. A strong performance by the EFF (built as that party is around a rejection of Jacob Zuma and a rejection of the economic status quo) could set off a shockwave in the ruling party.

Cyril Ramaphosa on a ‘social compact’

Cyril Ramaphosa gave an interesting address to the Mapungubwe Institute for Strategic Reflection (dated November 17 and available as a pdf on Mistra’s website) where he usefully summarised government’s and the ANC’s position on economic development – namely that ‘a social compact’ is required.

The full address is well worth reading, but the essential point (from a financial market perspective) is the statement that:

“Significantly, perhaps most importantly, business needs to focus on building an economy that delivers sustainable returns to all stakeholders over a longer term, eschewing the chase for high profits in the next quarter.”

Earlier, he says:

“The commitment to greater capital investment demonstrated by government needs to be matched by a similar commitment from the private sector to invest in productive capacity and to contribute to employment creation.”

So what?

Ramaphosa’s ‘social compact’ is another, perhaps more sophisticated, version of mining minister Susan Shabangu’s comments during an exchange with Gold Fields CEO Nick Holland at a recent conference in Australia:

“Investors must realise they have a responsibility to the country and cannot work to a bottom line that has no heart or soul at all … They have to understand there are various socioeconomic needs of the various partners … If investment will not improve the quality of lives — and recognise that workers also need to live decent lives — it will not be able to bring stability in South Africa … We are a country that, in the past, saw investment coming in that never contributed to ensure that the future of workers would be better.”

Shabangu’s and Ramaphosa’s comments indicate an economic strategy that consists primarily of insisting that private business surrender up the investment, employment and social spending that it is, supposedly, withholding. It indicates a poverty of economic understanding in government and the ANC that is deeply unsettling.

Bits and Pieces

Next weekend the Democratic Alliance meets in a special federal council during which the party is expected to attempt to deal with tensions around support or otherwise for the Employment Equity Amendment Bill. As the DA’s black membership grows the party will come under ever greater pressure to support both employment equity and black economic empowerment more generally. It is my view that this is a baseline assumption in South African politics – and the DA either will not break through its racial ceiling or it will shift on this policy matter.

Winnie Mandela, in an interesting interview in the Sunday Independent (17/11/2013), claims that Nelson Mandela has lost his voice – and is only able to ‘communicate with facial gestures’. She also said “the “poorest of the poor are seething with rage and whether our government is aware of the anger of the people, I do not know.” She also said: “I can’t blame Julius for what he has done because we, the ANC, are responsible for that … we would be foolish to think he is not a player or that he is not changing the political landscape … these are very dangerous and worrying times.” Winnie Mandela’s political affiliations are a good weathervane of the degree to which the ANC is – or isn’t – fragmenting. She is likely to stay within the ANC, at least while her ex-husband lives.

The Business Day today (18/11/2013) reports that moves are afoot in Cosatu to suspend or expel the National Union of Metalworkers of SA (Jacob Zuma’s key critic in Cosatu and Zwelinzima Vavi’s key ally). If the Jacob Zuma aligned faction achieves the objective of getting rid of Numsa and Vavi it is likely to precipitate the formation of a competing union federation and, possibly, a new political party of the left. The moves against Numsa seem like the actions of a weak and authoritarian core and are unlikely to achieve a unified and strong ‘ruling alliance’. In fact I suspect that the opposite will be the case.

E-tolling and the DA’s cruel billboards

Last week Jacob Zuma signed into law the Transport Laws and Related Matters Amendment Bill – meaning the unpopular e-tolling can begin on certain Gauteng highways.

I was impressed that the President did the necessary – despite the fact that this will cost the ANC votes in the 2014 poll especially in the closely contested Gauteng and especially amongst the class of people the ANC is, supposedly, at risk of losing to opposition parties.

Of course failure to sign the law might have led to downgrades by rating agencies and an even more hostile report from the IMF … but good for him anyway!

The interesting aside is that last week huge billboards sprung up along those highways saying things like: “E-tolling – Proudly brought to you by the ANC”.

Of course that campaign is funded by the Democratic Alliance snapping with its sharp little teeth at the ruling party’s heals .

Or perhaps it is more like being savaged by a duck?

Whatever, it’s all part of the razzmatazz that is going to be seriously tiring in about four months’ time but for the moment is mildly entertaining.

Election 2014 – the Zuma swings and the Zuma roundabouts

The major weeklies continued their faintly mindless coverage of Election2014.

City Press ran with two stories about how the ANC had decided to put Jacob Zuma delivering 50 specific and successful infrastructure projects at the centre of the ruling party’s election campaign. Not quite the shock the screaming headlines claim it to be.

All the Sunday Papers covered the fact that last weekend’s National Executive Committee of the ANC nullified the previous week’s Provincial General Council of the ANC in Gauteng. At issue was that the ANC in Gauteng is clearly not delighted to have to front itself with this particular president and believes its supposedly more urbane, sophisticated urban voters would be better wooed by Thabo Mbeki, Cyril Ramaphosa and/or Kgalema Motlanthe.

Deep behind the chatter is the growing view that the Zuma-face of the ANC is unlikely to charm the middle classes. The basic reasons, according to feisty City Press editor Ferial Haffajee, are made explicit in the Gupta wedding scandal cover-up:

“(it was not) the first time the party has been damaged by our president’s careless ways and friendships, which morph too easily into cronyism and patronage. There is a long line of infractions, stretching from the arms deal and his relationship with Schabir Shaik, to the rape trial he faced (the president was acquitted), the news of a child born out of wedlock with Sonono Khoza, the splurge at Nkandla and the game-playing with the courts around the spy tapes.” (Said the delightful, clever and middle-class Ferial Haffajee in her column in City Press on 06/10/2013)

The rumour mill is constantly hinting that in certain constituencies the ANC will lose votes because of perceptions about Jacob Zuma’s cronyism and his traditionalist lifestyle choices. The hints usually suggest that the ANC’s own polling information confirm the view.

Frankly it would hardly be a big surprise if certain middle class constituencies are not enamoured with Jacob Zuma. Previous elections strongly indicate that the president is wildly popular in poorer and rural communities, so things are likely to balance out for the ANC.

What would be a surprise is if government got its act together with regard to infrastructure delivery in any meaningful way before Election2014. While a burst of energy can only be a good thing, do not expect a miraculous improvement in infrastructure delivery to result from the ANC’s election campaign.

Microlending falls from favour

Microlending as a business took a number of hits this past week. Nobel Peace Prize winner and founder of the microcredit lender Grameen Bank, Muhammad Yunus, warned that microlending to finance consumption could lock the poor into a life of poverty.

More importantly from a local perspective, Futuregrowth Asset Management’s Andrew Canter was quoted in the Business Times (06/102013) saying the company would “wind down” its exposure to microlenders, including Capitec, African Bank and other unsecured lenders on “moral grounds” (unfortunately the story doesn’t specify if Canter was purely referring to Futuregrowth’s SRI funds – which would be my expectation.) Canter, according to the paper, said: “We have always backed the responsible firms, but the industry structure has provoked industry behaviours that are not good for consumers, or in our view, the nation” … but, he said, Futuregrowth would not make a “panic exit”. “If industry practices improve, or particular players create more sustainable lending products, we will look to back them.”

The microcredit industry has always been controversial and becomes more so when consumers are struggling to make repayments in declining economic conditions. With the link having been drawn between the Marikana tragedy and the extent to which the strikers where in dire straits with regard to loan repayments, it was only a matter of time before sentiment towards the lenders would sour. With sentiment this negative, government is likely to further tighten regulatory control of the sector, especially in an election build-up.

The judiciary – it’s that Jacob Zuma problem again

In a matter almost as impenetrable as it is serious, a judicial tribunal appointed to probe Western Cape Judge President John Hlophe’s alleged attempt to influence two Constitutional Court judges to rule in President Jacob Zuma’s favour when he was fending off serious allegations of corruption got under way last week.

Amongst the complicating factors is that the two judges Hlophe allegedly tried to influence, Chris Jafta and Bess Nkabinde, have indicated they do not wish to proceed with the complaint.

I am not going to pretend to be able to analyse adequately what is going on here. Follow Pierre De Vos at his excellent blog Constitutionally Speaking for all matters relating to politics and the constitution. There is going to be a lot of complex legal argument around this matter but most constitutional experts suggest that the judiciary will be harmed almost no matter the outcome.

The point we unfortunately have to keep uppermost in our minds is that politicians, and especially their machinations in internal struggles within the ruling party, have damaged our systems of law and the institutions that are important to our democracy – from the judiciary, to the prosecutorial authority and including all state sectors directly concerned with national security (including the SAPS, crime intelligence and National Intelligence Service.) And further, such damage continues unabated as powerful groups in the ruling alliance war against each other.

I have been on the road without respite for close to 4 weeks … so here is brief selection of some of my news commentary over the last few weeks, just to show that I am alive and working, albeit a little frenetically. Apologies for the out of date bits and the bits that history has caught up on already.

Terror attack in Nairobi is the leading-edge of an expanding band across West, North and East Africa

The conflict in Cosatu is serious for financial markets for several reasons, and while there are some narrow paths out of the quagmire it is increasingly unlikely that these will be the roads travelled by the incumbent leadership of the Ruling Alliance

The mining regulatory instability is the tip of an iceberg of hostile policy that investors need to start putting at the centre of their vision.

Nairobi terror attack part of a developing African front

The death toll in an attack on a shopping mall in Kenya’s capital city, Nairobi, rose to 59 by the time of writing this morning. The attack began on Saturday morning and appears to have been carried out by an international unit affiliated to Somali’s al-Qaeda linked al-Shabaab movement and is retaliation for Kenya deployment of 4000 troops to back the Somali government against the rebel army. On the same weekend 80 people were killed in Northeast Nigeria in a series of Boko Haram attacks.

So what?

al-Shabaab, joins Mali’s AQIM (al-Qaeda in the Islamic Maghreb), Nigeria’s Boko Haram and similar movement in Tunisia and Algeria in a thickening arc (across the whole of West, North and East Africa) of a specific al-Qaeda franchised brand of jihadist rebellion linked to the Wahabi or Salafi traditions that have their origin in Saudi Arabia. This arc of organisations is likely to play a significantly destabilising role, pushing both North and South in the years ahead. The jihadists will be looking for equivalents of Chechnya and Afghanistan as safe ground on which to train and equip international brigades (as they did in Mali up until the French intervened in January this year but might be still doing in territory outside of government and French control) and world powers will be looking to stop them. This will become an increasingly important element of investment decision across the whole band of countries affected. Kenya, Nigeria and Uganda are not necessarily mortally injured by events like the one at the Westgate Mall in Nairobi (that is still on-going as I write this) but the signal is that we need to have this matter more central in our assessments of the region.

Cosatu ructions have potentially serious implications for investors

The trade union ally of the ruling African National Congress continues to suffer a debilitating leadership struggle. Cosatu’s Central Executive Committee has received letters from the requisite quorum of unions insisting that a special congress of the federation be held. The weekly newspapers are full of speculation as to whether such a congress would reinstate Zwelinzima Vavi and get rid of Cosatu president Sdumo Dlamini, deputy secretary general Bheki Ntshalintshali; and Cosatu’s second deputy president Zingiswa Losi – who are Vavi’s main foes and Zuma’s main friends (simplification alert) amongst Cosatu’s NOBs (National Office Bearers).

So what?

It is possible that Sdumo Dlamini will attempt to block the special congress by arguing that several administrative and technical barriers (time, money and the upcoming national elections) make it too difficult to hold. This is what is at stake:

Based on previous voting patterns a special congress of Cosatu is likely to reinstate Vavi and it is conceivable that such a congress could expel the ANC and SACP loyalists from the federation’s top structure.

However an alternative outcome could be the reinstatement of Vavi, and the recovery of a fragile unity in the federation prior to next year’s election. This would require the top ANC leadership and its allies in Cosatu backing off their attempts to shaft Vavi. It appears this requirement would be difficult for the Zuma leadership of The Alliance to meet. Zuma’s leadership is increasingly characterised by a (essentially weak) reliance on force and the driving out of critics – as opposed to (an essentially strong) ability to provide leadership and establish hegemony over an unruly and contested alliance of forces.

Thus if the ruling group fails to find an accommodation with Vavi it is a real possibility that Vavi and his allies will be forced out of Cosatu. This result could be catastrophic for both the ANC and for industrial relations stability as a whole. Numsa would go with Vavi and Numsa would have the capacity to compete successfully with a host of other Cosatu unions, particularly the National Union of Mineworkers (Num). The disastrous consequences of the contest between Num and Amcu could be a template for similar contests between Numsa and several other Cosatu unions.

A split Cosatu could conceivable lead to the formation of a new ‘worker’ or ‘left’ political party or alliance that could, ultimately, challenge the ANC at the polls. There are a number of reasons why The Alliance has maintained its integrity for so long – and generally those who have been expelled or who have left of their own volition have shrivelled in the cold. However this conflict in Cosatu, driven as it is by the Zuma leadership’s attempt to supress criticism of corruption and dissent about policy, is changing the equation.

Vavi and his allies accuse the Zuma leadership of attempting to make Cosatu into a ‘labour desk’ of the ANC. It seems to me that this accusation is essentially correct and that the solution that would work best for the ANC and for industrial relations (in the short to medium term) would be to allow Cosatu to make its own decision about leadership at a special congress.

Mining regulatory instability is the tip of an iceberg of hostile policy

To understand how increasingly hostile is the stance of government towards business in South Africa, listen to the words of Chamber of Mines head Bheki Sibiya talking about the proposed mining law amendments after public hearings on the matter ended last week (in the Sunday Times, 22/09/2013 and Business Day of 20/09/2013).

He points out that the Mineral and Petroleum Resources Amendment Bill of 2013 intends to significantly empower the minister to intervene in the sector – specifically with regard to ownership and pricing. “Mining is long term. Once one is not so sure about one’s rights in the long term, one would rather say let’s cut our losses now. This is what investors will do … If pricing is not going to be decided by the markets but by some individual, then when you do your projections you’re shooting in the dark” he said.

Sibiya specifically bemoans the recent process of business engagement in various amendments to the Labour Relations Act and the Basic Conditions of Employment Act. In those cases years of proposals were essentially ignored by government and it (government) went ahead with what it wanted and what its alliance partner Cosatu wanted.

Business Day took these observations a little further this morning when it republished a quote from last week by Thami ka Plaatje, head of research at the ANC and an adviser to Public Service Minister Lindiwe Sisulu: “We are still wresting control from the white capitalist economy. We still reel under the oppressive yoke of all-pervading oligopolistic and monopolistic forms of the white economy.”

So what?

Regulation and policy in a complex, modern, small and open economy like South Africa’s requires a degree of sophistication that seems increasingly absent from this government. Policy and political risk is inevitably escalating as a government with a diminishing capacity develops an expanding agenda.

…. and then, from even further back, for those with an interest in ancient history …. like 4 weeks ago:

Strike wave breaks across the country – there are both normal and abnormal drivers

Num (the National Union of Mineworkers) has served notice on the Chamber of Mines (COM) of its intention to strike across the gold sector, beginning with the Tuesday night shift this week. Num represents 72,000 of the country’s 120,000 goldmine workers. The Chamber made a final offer of a 6-6.5% wage increase, while Num is holding out for 60%. Amcu, which is also represented in the gold sector (now 19% of workforce according to the COM, but probably as high as 30% according to Adrian Hammond, gold analyst on the BNP Paribas Cadiz Securities) wants a 150% increase but has not announced that it intends to strike, and nor have Solidarity and Uasa.

There are ongoing strikes by workers in auto manufacturing, construction and aviation services and threatened strikes among textile workers and petrol station employees – but these strikes are, at this stage, part of the normal cycle.

So what?

We have mentioned previously:

“South Africa has a predictable strike season, the timing of which coincides with the expiration of bargaining chamber agreements in different sectors of the economy. Every year it appears that a wave of strikes is enveloping the country, but at some time during the gloom, journalists twig to the fact that this happens every year – much of the flurry in normal and predictable” – SA Politics, April 29 2013.

Several such ‘predictable’ strikes are happening or about to happen as I write this.

However, the gold sector breakdown is outside of the normal cycle both in how far the negotiating parties are away from each (6-6.5% versus 60-150%) and in the complex game being played between Num and Amcu. Amcu has quietly welcomed the impending strike as a chance to prove that, in fact, Num does not represent the majority of workers at key mines. On Friday, Amcu president Joseph Mathunjwa said Num’s strike would “qualify” its official representivity of more than 60%. He urged that everyone should: “watch this space”.

Business Report in the Sunday Independent argues that South Africa’s four biggest gold producers are hoarding cash and lining up access to more in preparing for an industry wide strike. “If we are, let’s say, bullied into a situation that we don’t like, we can ride out the storm for a very long period of time,” said Sibanye chief executive Neal Froneman in the Bloomberg sourced story.

The essence of the gamesmanship between Num and Amcu is Num must demand and win an increase via strike action that is satisfactory to its membership, and Amcu must try and undermine the strike action and argue that, anyway, the ‘demand’ in the Num led strike is inadequate. On mines where Amcu dominates (in the Carletonville region at AngloGold, Harmony Gold and Sibanye Gold, according to Adrian Hammond BNP Paribas Cadiz Securities gold analyst – see his note “Wage Negotiations – The Final Round? August 28 2013) Amcu must attempt to force mines out of the central bargaining process by ensuring that no central agreement can achieve a sustainable settlement at the local mine or company level.

Lock-out

An interesting discussion in today’s Business Day by the always excellent Carol Paton suggests that employers with large Amcu membership, specifically at Amcu strongholds at AngloGold Ashanti’s Mponeng mine; Harmony’s Kusasalethu and Sibanye’s Driefonteing favour a lock-out because they believe Amcu will sit out the Num strike and then strike themselves once that is settled. Paton’s story suggests that by locking workers out employers force all workers into one camp. “By declaring a lockout, employers would get around this problem, through forcing Amcu into the dispute now and exhausting workers’ resources to endure a strike.”

Alliance Summit

The African National Congress, the South African Communist Party, the Congress of South African Trade Unions and the South African National Civics Organisation met in a long postponed summit over the weekend to discuss and agree upon economic policy. The premise of the discussion was “unless we make significant inroads in addressing the challenges of poverty, inequality and unemployment, the democratic constitutional gains of the first phase of our transition will themselves be eroded” – from the Summit Declaration

The Declaration situated the discussion by arguing that

“… stagnation continues to characterise the developed economies, there has now been a significant slowing of growth in key developing economies, including China, India and Brazil. The commodity super-cycle of the recent past is now over. This has had an impact on economies dependent upon the export of industrial minerals and coal. The attempts to refloat growth in the US with a loose money policy have created further turbulence in many developing economies like SA.”

The Summit went to some lengths to defend against the accusation that poor economic performance was in any way related failures of “the South African government, or the labour movement”. Instead, the summit declaration lists achievements in infrastructure build, land reform and youth and labour market reform.

On macroeconomic policy the summit called for:

“bold forms of state intervention, including through:

Financial regulation and control;

Progressive and redistributive taxation

Wage and income policies and progressive competition policies that promote decent work, growth and address poverty and inequality.

A well-resourced state-led industrial and trade policy

Increased state ownership and control in strategic sectors, where deemed appropriate on the balance of evidence,

and the more effective use of state-owned enterprises

So what?

The Alliance Summit used all the right language to keep the different elements of the alliance together but said nothing that might reassure spooked investors. The opposite is probably true. Just look at the words: “progressive and redistributive taxation”, “well-resourced state-led industrial and trade policy”, “increased state ownership” and “wage and income policies … that … promote decent work, growth and address poverty and inequality.” This is not the language that Kgalema Motlanthe used as he attempted to pacify investors at the presidential mining lekgotla in Johannesburg last week, but it is precisely the atmosphere of mining minister Susan Shabangu’s words at the Africa Down Under mining conference Perth, Western Australia, where she said investors had to “moderate” the rates of return they expected to earn on their investments so as to allow for the social expenditures that need to be made (Business Day August 28). The ANC and government are increasingly schizophrenic in their attempts to keep everyone (constituents, allies and investors) happy. In trying to keep everyone happy the ANC and the government seem more likely to achieve generalised dissatisfaction.

Criminal justice system appropriately named

The lead stories in the Weeklies were indicative of a growing anxiety about the criminal justice system. The Sunday Times led with “Magistrates: drunks, thieves and killers” and the other papers all discussed National Police Commissioner General Riah Phiyega’s embarrassment after she announced the appointment of a Major-General Mondli Zuma and then quickly reversed that when she was told that Zuma (whose relationship to the President is unknown to me) was being tried for driving under the influence of alcohol, failing to comply with a traffic officer’s instructions to stop at a roadblock, escaping lawful custody, defeating the ends of justice and refusing to have a blood alcohol sample taken.

So what

This might look like a circus but there is a darker element to the state of the criminal justice system than is not immediately obvious in these comical stories. In the Sunday Independent, journalist Nathi Oliphant writes about the security and justice sector: “President Jacob Zuma has unflinchingly stuck to his guns in promoting ‘his own ’into key positions”. The security apparatuses and the criminal justice system more generally has been profoundly weakened by political interference and the dismaying newspaper headlines about criminality amongst magistrates and senior police generals is just the visible tip of the problem of Thabo Mbeki’s and Jacob Zuma’s serious fiddling in the security and justice clusters and institutions.

Editor flees from Gupta TV

“Visibly terrified and hiding in a Johannesburg hotel room, the former consulting editor at ANN7 has made explosive claims about visits by channel bosses to President Jacob Zuma, where Zuma made editorial recommendations and was ‘given assurances by the Guptas this channel was going to be pro-ANC’” – reads the lead story in City Press.

So what

Nothing, really. ANN7, or GuptaTV as it has been named in much of the South African media, continues to provide comic relief and excruciating embarrassment, in about equal measures. Jacob Zuma’s relationship with the Gupta brothers is probably no laughing matter, but I wouldn’t hold my breath waiting for the criminal justice system to test whether Zuma’s relationship with the Gupta brothers is in anyway similar to his relationship with the Shaik brothers.

Early on Monday mornings I send my clients a review of the previous week’s political news which might be of relevance to financial markets.

This morning I thought the issues were of more general interest.

Thus …

Summary:

It is difficult not to see the main items in this review as connected:

The ANC yesterday disbanded its Youth League’s executive and the executive of its Limpopo provincial structure – both epicentres of the unsuccessful campaign against Zuma in the lead up to Mangaung;

An investigation into Cosatu secretary general Zwelinzima Vavi’s affairs and political loyalties deepens and widens – although, just because it is a stitch-up doesn’t mean there is no fire within the smoke;

Zuma’s approval rating among city dwellers drops to an all-time low and disapproval ratings rises to an all-time high.

Main body text:

Yesterday, it was reported that at its 4 day legotla [1], the ANC National Executive Committee disbanded, as expected, the Provincial Executive Committee of the party in Limpopo. More surprisingly the NEC of the ANC then went on to axe the NEC of the ANC Youth League – which most observers had thought abased itself adequately to Jacob Zuma after failing to unseat him at the Mangaung national conference. (Note I am reliant on news reports for this … the ANC NEC is due to hold a press conference at 12h00 today where it will give a fuller report.)

So what

The Limpopo ANC and the ANC Youth League were the launching pads of the challenge against Jacob Zuma that had been led by Julius Malema. Disguising itself behind the ‘nationalisation of mines’ call and funding itself through tender abuse in Limpopo the challenge peaked in mid-to-late 2011, just before Julius Malema was suspended. While the leaders of the ANC Youth League were clearly surprised by their axing yesterday, they can probably count themselves lucky that they are not being taken down the same path as their erstwhile leader Julius Malema, which might well end in prison for corruption charges.

While the Limpopo ANC, and to a lesser degree the ANC Youth League NEC, were riddled with corruption, it would be a very generous interpretation of what happened yesterday to see it as a “clean-up” of the ruling party. The more appropriate prism would be to understand this as an attempt to get rid of centres of resistance to the leadership of Jacob Zuma and the faction he represents. In a less jaundiced view, it is also an attempt to establish a basic degree of coherence in the party before the national elections which will be held midyear 2014.

Cosatu – 3 commissions to investigate Vavi

Zwelinzima Vavi is facing 3 simultaneous commissions into aspects of the criticism that members of Cosatu’s national executive committee made against him two weeks ago – including that he has been involved in corrupt activity and that he is disloyal to the ANC. This comes against the backdrop of ANC secretary general, Gwede Mantashe, attacking Cosatu for failing to defend the ANC against “a neoliberal agenda” and he has warned that anarchy is taking root in Cosatu: “my conclusion is that Cosatu is on a dangerous downward slope” – (Mail & Guardian March 15). (This added after publication – Carol Paton, in her excellent article in Business Day about this matter a few hours ago said: “One of the most distasteful dimensions of Cosatu’s internal fight has been the partial role played by several journalists, who have published information from parties to the conflict designed to smear Vavi. For example, allegations have appeared in the press to the effect that Vavi sold Cosatu’s former headquarters for R10m less than the market price. But such a direct allegation has not been made in a Cosatu meeting.

So what?

The answer is best provided by a quote from “a senior Cosatu leader” in the same article: “All this is a smoke screen. The main cause of divisions in Cosatu is ANC and SACP politics. The two organisations are trying hard to capture Cosatu, but Vavi is the obstacle. He is the only one prepared to defend the interest of workers. Dealing with him will ensure that they capture the federation.”

Not unlike the decision by the ANC NEC to close down internal opposition in Limpopo and in the Youth League, at least part of what is happening in Cosatu is an attempt to close down criticism of Zuma (especially after Vavi called for an investigation into the R230 million state spending on Zuma’s home in Nkandla) and criticism of the ANC more generally. This is the Nkandla faction crushing the last vestiges of the attempts to unseat Zuma at Mangaung – as well as an attempt to establish coherency in the ruling alliance in the lead-up to national elections next year.

(The allegations against Vavi – aside from ‘collusion with opposition’ parties – includes that he sold Cosatu’s old head-office for R10 million less than its market value and that he awarded a tender to a company at which his stepdaughter was employed. Just because there are other agendas at play, says nothing of the veracity or otherwise of these charges. Vavi himself has welcomed the commissions, stating that he believes they will clear him of all charges – although, interestingly, he attempted, unsuccessfully, to have ANC stalwart Pallo Jordan and Minister of Economic Development, Ebrahim Patel as commission leaders.)

(This added after publication: Carol Paton writing in Business Day argued a few hours ago as follows: “One of the most distasteful dimensions of Cosatu’s internal fight has been the partial role played by several journalists, who have published information from parties to the conflict designed to smear Vavi. For example, allegations have appeared in the press to the effect that Vavi sold Cosatu’s former headquarters for R10m less than the market price. But such a direct allegation has not been made in a Cosatu meeting.” I wish I had put that in earlier.)

Zuma approval rating among city dwellers drops to all time low

The Sunday Times reports that President Jacob Zuma’s approval rating among urban dwellers is lower than ever and his disapproval ratings are at their highest – and, in general, views are firming up on this matter.

%

Apr

‘09

Jun

‘09

Sep

‘09

Nov

‘09

Feb

‘10

May

‘10

Sep

‘10

Nov

‘10

Feb

‘11

Mar

‘11

Sep

‘11

O/N

‘11

Feb

‘12

Apr

‘12

Aug

‘12

Feb

‘13

Approve

52

57

53

58

43

51

42

49

49

48

45

55

55

46

48

41

Disapprove

29

13

19

23

41

33

44

34

35

38

41

38

35

46

44

51

Don’t know

19

31

28

12

17

16

15

17

16

14

14

14

10

8

8

9

Net positives

+23

+24

+34

+35

+2

+18

+2

+18

+2

+15

+14

+1

+20

0

+4

-10

Zuma’s approval ratings amongst city dwellers over time (TNS Research)

TNS conducted home interviews with “1290 blacks, 385 whites, 240 coloureds and 115 Indians and Asians.”[2] 54% of black people were still happy with Zuma’s performance, but only 13% of whites. The president still has 64% of the vote from “younger Zulu-speaking adults, of whom 64% – down from 71% in August last year – were happy with his work” (Sunday Times).

An important indicator comes near the end of the story: “Zuma’s biggest drop in approval was recorded in Soweto, where the figure of 42% was the lowest since he assumed office. The Port Elizabeth figure of 22% was also an all-time low.”

So what?

National general elections must be held some time between April and July in 2014. For the first time “born frees” (young people born after 1994) will be eligible to vote. This first wave of born frees will consist of approximately 6 million people, “using the 76% turnout of the 2009 elections, these new voters could make up more than 20% of the vote by 2014 … for context, the Democratic Alliance won 17% of the vote in 2009. From 2014 onward, the born-frees will come in waves of just over 5-million each national election until they make up nearly half of the voting population by 2029” – (Osiame Molefe in the online news source Daily Maverick).

There is growing excitement that, perhaps, this category of voter, and urban African voters more generally, might be open to political choices unthinkable only a few years ago. Much of the growing expectation in the Democratic Alliance and the energy behind Agang comes from this source. Could younger and urban voters (especially Africans) vote for a party other than the ANC in 2014?

Jacob Zuma has established a rigid hold on the ANC, but the TNS and other market research could indicate that it is precisely this victory that makes the ANC a less appetising choice for younger and urban voters. If Jacob Zuma leads the ANC in an election in which the ruling party gets much less than 60 % of the vote, his hard but brittle hold on the party could shatter.

ANC strategists are seriously worried about both the Eastern Cape (especially, but by no means exclusively, the Nelson Mandela Bay metropolitan area) and the Northern Cape. The idea of whole of the Cape (Western Cape is already in Democratic Alliance hands) in opposition hands and a party the equivalent to the Movement for Democratic Change in Zimbabwe giving the ANC a run for its money in urban areas throughout the country is a nightmare scenario.

Analysts have consistently been surprised at how well the ANC has performed in national elections (62.65% in April 1994, 66.35% in June 1999, 69.69% in April 2004 and 65.90% in April 2009) so treat any wild predictions with a degree of scepticism. However, the TNS survey of Jacob Zuma’s ratings is an indicator that shifts are in progress .

Bits and pieces

Business Times quotes a succinct put-down by Finance Minister Pravin Gordhan of the ratings agencies: “[You must] understand that we in South Africa did not create this crisis …when … the financial sector began to create … derivatives, based on sub-prime mortgages … [they] had an AAA rating given to them by the same agencies.” Last week S&P affirmed South Africa’s foreign currency sovereign credit rating at BBB and kept the outlook negative, arguing that external imbalances and underlying social problems remain.

All the major weeklies expressed deep levels of concern about what they see as out-of-control police violence in the country – most obviously evinced in the killing of Mozambican taxi driver Emidio Macia in Daveyton, but also brought into public focus by police commissioner Riah Phiyega’s spoon-fed testimony to the Markikana commission on Thursday last week. Police minister Nathi Mthethwa is one of Zuma’s closest allies and his department is, truly, in a parlous and dangerous state.

[1] A word in South African English borrowed from Sesotho, usually meaning a consultation or community meeting with government and the community or within a political party

[2] Categories and language routinely used in South Africa where the racial categorisation of the past is correctly understood to have a significant influence in the present and is routinely used in the media and academic analysis.

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I am an independent political analyst focusing on Southern Africa and I specialise in examining political and policy risks for financial markets.

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